Sales, income, cig tax hikes proposed to relieve property taxes; TransCanada says Keystone XL viable

Taxes are under discussion in Nebraska's Capitol (Photo by Fred Knapp, NET News)
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January 18, 2018 - 5:27pm

A bipartisan group of state senators is proposing to raise sales, income and cigarette taxes to lower property taxes, while Gov. Pete Ricketts is proposing income tax changes to avoid Nebraska’s reaping a windfall from federal tax changes.

Meanwhile, TransCanada’s announcement that it plans to go ahead with the Keystone XL pipeline is getting a skeptical reaction from opponents.

State sales taxes would go up by half a cent. People with incomes of $500,000 or more would pay higher income taxes. Cigarette taxes would go up a dollar a pack. Schools would get more money, and property taxes could go down by 25 percent. Those are among the highlights Sen. Tom Briese points to in a bill he introduced Thursday.

Briese said he has two main goals. “Nebraskans deserve a fair and balanced tax structure. But at the same time, Nebraskans realize that there’s nothing we do that’s more important than how we educate our children,” he said. “This bill recognizes both of those principles.”

Briese said he’s worked with farm, property owners’, and education groups on the proposal. Jenni Benson, president of NSEA, the state teachers union, said details may still change, but the union supports the overall idea. “We support the concept of going forward and seeing where changes can be made, but overall, yes, we support the concept very much and we are very supportive of Sen. Briese bringing this forward,” Benson said.

Benson said Nebraska ranks 49th among the states in the percentage of school funding that comes from the state.

The proposal is also getting positive reaction from Bruce Rieker of the Nebraska Farm Bureau Federation. Rieker called it a “responsible proposal” that brings together a variety of interests, agreeing that it’s a work in progress.

Gov. Pete Ricketts was not immediately available to comment. But Ricketts has consistently opposed the idea of raising other taxes to shift the burden away from property taxes.

Briese was asked how he would respond to critics who say the proposal amounts to nothing more than a tax increase. “There is absolutely no sustainable and responsible way to provide the property tax relief hardworking Nebraskans deserve without raising this revenue,” he responding, adding “this is nearly a revenue-neutral proposal. Most of the dollars that we generate here from state sources will eventually yield property tax relief for hardworking Nebraskans.”

Briese said the bill also contains what he described as a “soft cap” to limit how much schools could get from property tax, with certain exceptions for things like inflation and student growth. Briese said he wants to get feedback from the legislative fiscal office before getting into details about how much the plan would raise, but it could be in the range of $600 to $900 million.

Meanwhile, the Ricketts administration is proposing changes to Nebraska’s individual income tax law to avoid getting a revenue windfall from recently-passed federal tax changes. “If we did nothing, then Nebraskans will be paying another $220-some million in taxes,” Tax Commissioner Tony Fulton said.

For example, the new federal law repeals personal exemptions. But the new state proposal would keep state personal exemptions, thus avoiding what Fulton says would otherwise be a tax increase.

Nebraska is facing a projected budget shortfall of $173 million. Fulton was asked why the administration is proposing the changes, when it could keep the money and fill that gap without the need for further budget cuts. He says that’s not what his boss, Gov. Ricketts, wants to do. “That was not our charge. There may be others who propose something different, but we were not going to take the tax cuts and jobs act and use it as the opportunity to raise taxes on Nebraskans,” Fulton said.

Also Thursday, pipeline company TransCanada announced it has commitments from shippers to move about 500,000 barrels per day through its proposed 830,000 barrel per day Keystone XL pipeline, and is moving ahead with the project.

Last year the Wall Street Journal, among others, questioned whether there was still enough demand for relatively expensive oil sands oil the pipeline is supposed to transport from Canada to Gulf Coast refineries, through Nebraska.

TransCanada spokeswoman Robynn Tysver said today’s announcement should put that speculation to rest. “Today we showed definitively that there is a need for this project and that there is commercial support for this project,” she said.

Ricketts called TransCanada’s announcement “welcome news,” adding the pipeline will improve energy security, create jobs and generate new property tax revenue.

But Jane Kleeb of the anti-pipeline group Bold Alliance, which objects to potential environmental consequences, said TransCanada still has a long way to go. “I think this is TransCanada to signal to JP Morgan and other investors that this is still a possibility,” Kleeb said.

Kleeb said a JP Morgan note to investors last month stressed the need for commitments of at least 500,000 barrels per day. And she notes TransCanada still faces lawsuits over it route and use of eminent domain in Nebraska that could derail the project.

And in other news Thursday, Nebraska Supreme Court Chief Justice Mike Heavican highlighted so-called problem-solving courts in his annual State of the Judiciary address to lawmakers.

For a story on veteran's courts, click here.

Nebraska offers special alternative courts for veterans, drug users and recently released prisoners. Heavican says the veterans' treatment courts offer support and encouragement to participants, many of whom are struggling with drug or alcohol abuse or mental health problems.




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