Pros, cons of income tax cut heard; filibuster crackdown promoted

Senators heard arguments for and against Gov. Pete Ricketts proposed tax cuts Wednesday. And they took a step toward making it easier to cut off filibusters, despite warnings of unintended consequences.

Leading off the hearing on Gov. Ricketts proposed income tax cuts, Sen. Jim Smith, chairman of the Revenue Committee, made it clear what the idea is. "Ultimately the goal is to reduce the top marginal tax rate for individuals and pass-through business taxpayers from 6.84 percent to 5.99 percent," Smith said.

Ricketts followed up explaining the reason for the change. "To be able to expand our state we’ve got to become more competitive. If we want families to move here, if we want businesses to expand here, we’ve got to be more competitive with the other states that we’re competing for those families and businesses. And one of the areas we have to be more competitive on is our income taxes," Ricketts said.

"If you look at our surrounding states, the only state around us that’s got a higher income tax rate than us is Iowa. Wyoming and South Dakota have no income taxes. Kansas, Colorado and Missouri all have lower rates than we do," the governor continued.

Among those opposing the bill was Ken Kriz, a professor of public finance at Wichita State University who used to teach at the University of Nebraska-Omaha. In an interview, Kriz said Kansas enacted similar tax cuts several years ago, under the theory that they would stimulate economic growth and generate revenues the state could use.

"Just the opposite has happened. Economic growth has stagnated. Job growth was actually negative for the last year in the state. And so they’ve had to make cuts in K though 12 education. Universities, we’re looking at a six or seven percent cut this year. Road projects have been delayed. There’re making cuts in Medicaid reimbursement. It’s all the kind of major programs that people use on a day-to-day basis. There’s really a lot of pain in Kansas right now," Kriz said.

Mark Fahleson, chairman of an organization called Reform for Nebraska’s Future and former chairman of the Nebraska Republican Party also opposed the Republican governor’s proposal, LB337. "That bill is, in our opinion, a dog barking up the wrong tree. The vast majority of Nebraskans want property tax relief. But LB337 addresses only income tax relief," Fahleson said.

The committee also heard testimony on Ricketts’ plan to reform property taxes by changing valuations on ag land from market value to income producing potential. Organizations including Reform for Nebraska’s Future and the Nebraska Farm Bureau advocate increasing or expanding sales taxes to relieve property taxes – ideas that are expected to compete with Ricketts’ proposals.

In legislative debate Wednesday, senators took a step toward making it easier to cut off filibusters. That’s a legislative technique used by senators who are in the minority on any particular issue, who keep on talking to delay a vote to pass legislation.

The way to end a filibuster is by a "cloture" vote. That requires a vote of 33 senators in the 49-member Legislature, so in effect, a minority of 17 senators not supporting cloture can block legislation.

Sen. Tyson Larson wants to make that blocking more difficult, by requiring all 17 senators to vote against cloture, instead of letting them achieve the same result by simply not voting – sometimes referred to as a "soft" no.

Larson said senators opposed to a bill "might not want to go onto the record and they might just not vote. Therefore they can go home to their constituents and say ‘Yeah, I would have really liked to have seen that tax cut or whatever, but it just couldn’t break the cloture motion.’ But they don’t tell them (the constituents) that they didn’t vote for the cloture motion," Larson said.

Sen. Ernie Chambers dismissed that argument. "If people want to put on record how somebody voted or didn’t vote, ask for a record vote. That’s in the rules right now," he said.

Senators voted 25-19 in favor of Larson’s proposed amendment to the legislative rules.

Votes in favor of the change came exclusively from Republicans and the one Libertarian in the officially nonpartisan Legislature. Democrats and a handful of moderate Republicans supplied the no votes.

Sen. Paul Schumacher, one of those moderate Republicans, warned that making it easier to shut off minority views would have potentially serious consequences in an increasingly urban Legislature. "This is serious stuff. And it’s going to affect ag interests and rural interests more than anything else. Because that’s a position that’s getting weaker by the numbers each time we redistrict," Schumacher said.

Schumacher vowed to introduce a series of amendments to force senators to debate and vote on whether they want to make it easier to shut off debate on controversial topics, such as the right to farm.

But Sen. Mike Groene warned the minority could suffer electoral consequences if they continue to resist changing the rules. "You go ahead -- keep doing this, and see what happens in two years and see how much of a minority you have then. There’s frustration across the state at what’s happening here. And it’s not at the majority. It’s at those who are basically filibustering a entire session," Groene said.

Lawmakers adjourned for the day – the 25^th day of this year’s session -- without adopting permanent rules for how they’ll operate for the rest of the session.