Lawmakers unveil more ambitious property tax relief proposal, raising sales tax ¾ of a cent

Lawmakers unveil more ambitious property tax relief proposal, raising sales tax ¾ of a cent

LINCOLN — State lawmakers upped the ante Wednesday, unveiling an even more ambitious property tax relief proposal amid another round of criticism from Gov. Pete Ricketts.

The new tax plan, detailed by State Sen. Lou Ann Linehan and fellow members of the Legislature’s Revenue Committee, would increase state sales taxes by ¾ of a cent — higher than an earlier proposed ½-cent hike — and raise a handful of other taxes to provide about $540 million a year in property tax relief.

Linehan, who chairs the committee, said the panel’s current proposal is still subject to amendment, but as it stands, it would deliver an average decrease of 20% in local property taxes — taxes that have traditionally ranked among the nation’s highest.

“Property taxes are ridiculous in Nebraska, and we need to fix it,” said the senator, who formerly helped round up votes in Washington, D.C., for Sen. Chuck Hagel.

Earlier on Wednesday, Ricketts took another swipe at the committee’s proposals, standing with a convenience store owner to rap the idea of raising taxes on items sold at convenience stores, such as pop, junk food, bottled water and cigarettes.

Later Wednesday, the conservative Republican labeled the new legislative proposal “on track to be the largest tax increase in Nebraska history.”

“I am alarmed that senators are even considering this,” Ricketts said.

Linehan, at a press conference called by Revenue Committee members, said Nebraska taxpayers would gladly trade a ¾-cent hike in sales taxes for a cut in the more dreaded property taxes.

“It’s a very good deal,” she said.

Besides the ¾-cent increase in the state sales tax, the proposal would increase cigarette taxes by 36 cents a pack, to $1, and repeal tax exemptions on several items, such as candy and pop, and services like those provided by plumbers and movers, and veterinarian care for pets. The plan would also take most of the $224 million now given to landowners as a state property tax credit and utilize it as state aid to K-12 schools.

Every cent of the new revenue would be used for property tax relief, Linehan said, and the plan would put a new lid on spending property tax revenue based on the consumer price index — which was estimated to be about 2.1% to 2.3% — plus growth within a district.

Overall, the extra revenue would boost state aid to schools by $540 million — about $80 million a year higher than an earlier plan. The state aid would supplant local property taxes and provide at least 33% of the cost of K-12 education for every school district, ending a system that now gives so-called “equalization aid” from the state to only about one in four school districts.

Linehan said the committee’s proposal would “turn the bus around,” from placing the burden for funding schools on local property taxes, to having state sales and income taxes shoulder the load. Nebraska, which now provides one of the nation’s lowest state funding levels for local schools, would end up in the middle of the pack under the proposal, the senator said.

Ricketts, meanwhile, touted his own plan on Wednesday. It would boost the state’s property tax credit program by $51 million a year and would slow spending by schools, cities and counties by placing a 3% lid on the spending of property tax proceeds.

“It’s not right to raise some taxes for someone else’s tax relief,” Ricketts said of the legislative plan.

Standing outside of a Lincoln convenience store Wednesday morning, he said that such businesses “keep our state moving” by providing quick meals for hardworking Nebraskans and that raising taxes on pop, candy and tobacco were “regressive” taxes that hurt the poor most.

Ricketts added that one-third of all smokers make less than $25,000 a year and that taxing convenience items would cost a typical family an additional $1,800 a year.

A petition drive has already been launched that would allow Nebraska voters, in 2020, to vote on a property tax reduction plan, one that many senators see as dangerous and as a reason to pass substantial relief via the Legislature.

But Ricketts on Wednesday said that a similar petition drive fizzled in 2018 and that he saw no reason why this one would be successful in getting the idea on the ballot.

Linehan, meanwhile, said that she’s seen such initiatives pass and that it was no time to “sit and stare” at the problem of high property taxes.

“We can sit and stare at the problem, or we can fix the problem,” she said.

North Platte Sen. Mike Groene, one of the main drafters of the new plan, said he was very optimistic that the Legislature can get something done, calling the new amendment “perfect.”

“It fits everybody,” Groene said.

That, he said, includes the Omaha Public Schools, which, under the plan, would get the authority to levy an extra 6 cents per $1,000 of valuation in property taxes to address its $770 million pension shortfall. OPS patrons would still see a property tax reduction overall, Groene and others have said.

The committee’s proposal, which will be an amendment to Legislative Bill 289, will be the subject of a public hearing next Wednesday.

Not all eight members of the Revenue Committee — and perhaps only three or four — support the new amendment as written.

Bellevue Sen. Sue Crawford said that the earned income tax credit needs to be increased for low-income Nebraskans — to offset the sales tax increase — before she would support it. She said she’s also concerned that the amendment would hurt cities and counties, by lowering the taxable valuation on residential and commercial property, from 100% to 90%, and from 75% to 65% on agricultural land, thus giving them less valuation to tax.

Omaha Sen. Brett Lindstrom, meanwhile, said he liked the approach the amendment is taking, especially the added relief for the pension problem at OPS.

Two farmers on the Revenue Committee, Sens. Tom Briese and Curt Friesen, said they wanted to see more benefit to farmers and ranchers, who have seen their property tax bills rise by 50% in recent years and were the first to beat the drum for substantial property tax relief.

But the senators said they stood with Linehan on Wednesday to show their support for continuing to work on the issue.

Bill requiring voter approval of some cellphone taxes stalls in Legislature

Cellphone taxes. A proposal to require voter approval of local cellphone taxes stalled Wednesday in the Legislature.

Senators debated Legislative Bill 550 for parts of two days before lawmakers moved on to other issues.

State Sen. Tony Vargas of Omaha introduced the bill, saying he couldn’t understand why Nebraska’s taxes on wireless phone services were fourth-highest in the nation. Requiring a vote to continue local occupation taxes on cellphone bills (the tax amounts to 6.25% in Omaha and 6% in Lincoln) would require cities to justify the levies.

But the bill got plenty of pushback from some senators, who argued that it wasn’t right for the state to tell cities how to handle local tax issues.

Lincoln Sen. Adam Morfeld said that if Lincoln lost the $4 million it gets from occupation taxes on wireless phone services, it would create budget problems — problems that could force an increase in property taxes. He added that if people don’t like local cellphone taxes, they should replace their City Council representatives.

It was unclear whether LB 550 would return to debate this year. Seven years ago, then-State Sen. Deb Fischer tried to get a similar measure passed concerning voter approval of all occupation taxes. She won approval of a compromise proposal that required voter approval of major occupation taxes.

Wind energy and eminent domain. The second time was a charm for Gordon Sen. Tom Brewer, who won first-round approval of his wind energy bill on Wednesday after it had stalled earlier in the session.

Under a compromise version of LB 155, advanced on a 40-1 vote, public power districts would get a “rebuttable presumption” that their use of eminent domain to install transmission lines to wind farms is in the public interest.

That language, supporters said, would give landowners who didn’t want a connecting line across their property a chance to argue against it in court.

Legislature passes bill allowing sales tax to help pay Beatrice Six settlement

Beatrice Six judgment. Gage County could impose a half-cent sales tax to help pay a $28 million judgment owed to six wrongly convicted people under LB 472, passed on a vote of 43-6 Thursday. The bill was introduced by State Sen. Myron Dorn of Adams in response to a federal court judgement won by the so-called Beatrice Six.

The six, convicted in a 1985 slaying, collectively spent more than 70 years in prison before DNA testing identified another person as the killer. The case was one of the largest examples of wrongful confession and coerced testimony in the nation’s history.

Under LB 472, the county could only impose the special sales tax if its property tax levy was set at the maximum allowed under state law to pay off the judgment. The sales tax could be approved by a two-thirds vote of the county board. The tax would end when the judgment is paid off, or after seven years, whichever comes first.

Tourism products. The Nebraska Tourism Commission got a step closer to being able to sell “Honestly, it’s not for everyone” T-shirts, coffee mugs and other promotional materials with passage of LB 637. Lawmakers gave 49-0 final approval to the bill, introduced by Sen. John Stinner of Gering.

The measure was passed with an emergency clause, meaning that it would take effect as soon as signed by the governor and sales could start in time for the summer travel season. The snarky new tourism slogan garnered national attention when it was unveiled last year.

North O development. Voters will decide whether to let communities use an enhanced tax incentive to encourage development in extremely blighted areas. Lawmakers voted 43-2 to put Legislative Resolution 14CA on the November 2020 ballot.

The proposed constitutional amendment would allow tax-increment financing to last 20 years for projects in areas with high rates of unemployment and high rates of poverty. Currently, such financing is limited to 15 years.

Sen. Justin Wayne of Omaha introduced the measure to boost economic development in north Omaha, along with LB 87, passed 49-0. The latter bill would add federally designated opportunity zones to the priority sites for various state development programs.

Jailhouse informants. A bill passed Thursday would require prosecutors to disclose information about jailhouse witnesses, including any leniency they will get for testifying and any recanted testimony in the past.

LB 352, introduced by Sen. Adam Morfeld of Lincoln, passed on a 48-1 vote. The measure attempts to cut down on false jailhouse witness testimony, which proponents of the bill say is the leading cause of wrongful convictions.

Under the bill, prosecutors would have to provide information to the defense about an inmate who may be called to testify about statements made by the person on trial. Prosecutors also would have to notify victims of crimes committed by the jailhouse witness if the witness is being offered a plea deal for testifying.

Drug prices. Health insurance plans could not bar people from paying the cash price for a prescription drug, if that price is less than the person’s co-pay, deductible or co-insurance amount, under LB 316, passed 49-0 Thursday.

The bill, introduced by Sen. Mark Kolterman of Seward, also would prohibit pharmacy benefit management companies from penalizing pharmacists for informing customers about prescription cost options.

New Crime Commission director. Despite some concern that he lacked enough law enforcement background, Don Arp Jr. was confirmed Thursday by the Legislature as the new executive director of the Nebraska Crime Commission.

Former law enforcement officers have typically led the commission, which administers crime-fighting grants and standards for police officers, and state law requires that the director have “appropriate training and experience” in law enforcement.

But State Sen. Steve Lathrop of Omaha called those standards “very vague,” and said that Arp’s background with technology might help upgrade the commission’s statistical work.

Immigrant rally. Young Nebraska immigrants rallied Thursday at the Capitol to urge support for federal legislation offering them the possibility of permanent residency and a pathway to citizenship.

The youth called on Nebraska congressional representatives to back the bills, which would provide security for people brought to the United States illegally as children and to people allowed to stay in the U.S. because of wars or natural disasters in their home countries.

The first group was allowed to stay and work under the Deferred Action for Childhood Arrivals program, started under the Obama administration. The second group was allowed to stay through the Temporary Protected Status program. President Trump has attempted to curtail both programs.

Conservation award. Russ, Angela and Cheyenne Sundstrom, who operate a ranch near Moorefield, Nebraska, were named the recipients of the 2019 Nebraska Leopold Conservation Award on Thursday.

The Sundstroms have used prescribed burning and innovative grazing techniques to restore and upgrade the pastures on their ranch, as well as reduce invasive cedar trees.

The award is named after the famed conservationist Aldo Leopold and comes with a $10,000 award.