Ricketts' tax plan stalls; budget passed in Legislature

Sen. Jim Smith advocates for tax cuts in the Legislature Tuesday (Photo by Fred Knapp, NET News)
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April 3, 2018 - 6:40pm

Gov. Pete Ricketts’ tax plan stalled Tuesday in the Legislature, while lawmakers approved a budget including controversial language on abortion.


The governor’s tax proposal, in its latest form, would give owners of agricultural property an income tax credit to offset 2 percent of the property taxes they pay next year, rising to 20 percent in a decade. Homeowners would get a 1 percent credit, limited to $25 next year, rising to 20 percent, limited to $500, by 2030. And the corporate tax rate would drop from just under 8 to just under 7 percent, over the next five years.

Several senators who supported the proposal acknowledged that it’s a compromise between competing interests. Among them was Sen. Joni Albrecht. “This is what the Revenue Committee, the best that they could do and what they could come to as a compromise. It’s hard for all of us to swallow. We might not like certain parts of it. We might think somebody else should have to pay more, or less,” Albrecht said. “But we didn’t sit through those committee hearings. We didn’t understand all that was brought to the table. So if this is the best we can do I am very willing to wrap my arms around this, because this is something that our state needs.”

Sen. Rob Clements also supported the proposal, LB947. “I believe LB947 is a responsible way to get some property tax relief. Is it enough? No – not as much as I wanted, either. But it is a start,” Clements said.

But the proposal was buffeted between senators who said it does too little, and those who said it does too much. Among the former was Sen. Steve Erdman, who said a 2 percent credit was likely to be more than offset by property tax increases. “You have a chance to make a real difference, and this is not it. This is joke. This is an illusion,” Erdman said.

Sen. John McCollister was among those arguing the proposal would cost the state too much revenue, endangering future spending on education and social services. “Passing LB 947 is like driving on a treacherous mountain road without any guardrails. The bill reduces our rainy day fund to dangerous levels. And I think there’s no room if we were to do that for unforeseen events. It’s just too dangerous to reduce the rainy day fund to those levels,” McCollister said.

Sen. Jim Smith, chairman of the Revenue Committee, argued the bill he’s worked with Ricketts on is the only one still alive this year that could produce tax relief. “Sen. McCollister you said that this is a treacherous road with no guardrails. There’s but one road between here and there, where we need to be, and it’s the bill before us,” Smith said.

Erdman said there is a better alternative, referring to an initiative petition now being circulated that would create an income tax credit equal to half of what people currently pay in property taxes for schools – a total cut of about 30 percent.

Erdman said passing that would force the Legislature to act. “This body (the Legislature) never has, and I’ll make this statement – go ‘on record,’ as they say – never will make a tough decision unless they are forced to. Unless this body is forced to make a decision, we make no decision,” Erdman said. “So let me just tell you this: if you’re out there listening, and you hear my voice, sign the petition.”

Smith said people wouldn’t like the results if the initiative succeeds. “The ballot initiative will leave a significant, $1.1 billion hole in our budget. You want to talk about services being cut? Education being cut? That’s the reality if the ballot initiative is the option. And, cut are not going to be enough. There will necessarily be tax increases,” Smith said.

In a test vote of sorts, 25 senators – a bare majority -- voted against an attempt to kill the bill. But it would take 33 – a 2/3 majority -- to overcome a filibuster against it. After the debate, Smith said he wasn’t sure he had them. “It depends on what hour of the day and minute of the hour” it is, he said. “Sometimes it’s a bit fluid around the Legislature,” he said, adding “I would not be continuing this fight if I did not think that there is still a path to 33 (votes). But today was not the day to have that vote.”

Smith said he’ll keep trying, as the Legislature gets down to its last 7 business days.

Also Tuesday, lawmakers gave final approval to changes in the state’s two-year budget. Those changes cut most state agencies by 2 percent this year and next, when higher education gets only a 1 percent cut, and other areas like child welfare get a funding increase. The budget also prohibits giving any federal Title X family planning funds to organizations that also provide abortions.

Planned Parenthood is getting about $270,000 of Nebraska’s $1.7 million in Title X funds this year, and supporters of the organization, like Sen. Anna Wishart, said it is being targeted. “This proposed restrictive Title X disbursement directly restricts Title X money going to Planned Parenthood. There’s no doubt in my mind in that,” Wishart said. “While the bill does not name Planned Parenthood, there is only one abortion provider in Nebraska that receives Title X money, and that is Planned Parenthood.”

Sen. Mike Hilgers said the language is not aimed at any one organization.”I think that language was intended to stop any abortion provider from getting Title X money if they didn’t want to have a separate affiliate and they wanted to continue providing abortion services,” Hilgers said.

Senators voted 38-6 final approval for the budget, which now goes to Gov. Pete Ricketts for any possible line-item vetoes.

 

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