Legislature appears in stalemate over taxes

Nebraska Legislature meets Thursday (Photo by Fred Knapp, NET News)
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March 30, 2017 - 5:10pm

Nebraska lawmakers appear locked in a game of chicken over taxes, as taxpayers look on to see who swerves first, and who gets helped, or hurt.

It’s the dilemma that’s faced lawmakers all year: How to reconcile demands for property tax relief and income tax cuts at the same time as the state faces a looming budget deficit. Now, with nearly two-thirds of the legislative session gone, things look like they’re at a stalemate.

The Appropriations Committee is moving toward recommending a budget that cuts many state agencies. But bills aimed at relieving  property taxes and cutting income taxes are stuck in committee. Earlier this week, Gov. Pete Ricketts suggested both need to advance for either to have a chance. “I think it’s unlikely we’ll be able the votes to be able to pass property tax relief unless we also have income tax relief to be able to build that coalition that gets us to 33 votes,” Ricketts said. It takes 33 votes in the 49-member Legislature to defeat a filibuster.

Sen. Jim Smith of Papillion, chairman of the Revenue Committee, has been counting votes, and he agrees with Ricketts. “I just don’t believe that there is enough votes to get to the critical mass to get only property tax done this year, or only income tax. I do believe there’s a strong desire to get something done. Unfortunately, there’s differences of opinion as to what ‘something’ looks like,” Smith said.

Sen. Mike Groene of North Platte, chairman of the Education Committee, would like to see that ‘something’ look like converting an existing $220 million property tax credit fund into increased state aid to schools. Groene said that would help offset property taxes particularly in rural areas, where they’ve increased dramatically over the last decade because of increased agricultural land values.

Groene acknowledges the relief he wants would be skewed toward the rural areas. “When you fix an unequal injustice, the fix is going to be unequal, too,” Groene said.

Smith said Groene’s proposed fix won’t fly. “If that happens, it will increase the net property tax burden in urban counties and urban school districts. Yes, there will be relief in some rural counties and rural school districts, but at the expense of urban counties and urban school districts. And that’s not a way of doing this,” Smith said.

Sen. Adam Morfeld of Lincoln, a member of the Education Committee, said he’d rather see nothing than the income tax changes Smith wants, or the property tax changes Groene wants. “What I would like to see happen is for us to weather the downturn without having to cut taxes so that we don’t increase other people’s taxes in urban areas as well,” Groene said.

So after all the rhetoric about tax changes, is it possible nothing will happen this year? Smith won’t rule it out. “There’s always that possibility. I don’t rule anything out. You never know what a day brings in Nebraska’s weather or in the Legislature.  But with that said, I think more than not there’s a path forward,” Smith said.

Lawmakers have two months to determine whether that path leads anywhere, or hits a dead end.



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