Senators vote $50 million to property tax fund, not cash reserve

The Nebraska Legislature (Photo by Fred Knapp, NET News)
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May 8, 2019 - 5:59pm

Ignoring warnings that the state needs to rebuild its cash reserve, the Nebraska Legislature redirected $50 million to property tax relief before advancing the main state budget bill Wednesday.

Nebraska’s cash reserve is like the state’s savings account. It’s used for capital construction projects, and to help the state pay its bills when tax revenues fall during a recession, for example.

In recent years, as a weakening farm economy has held down tax revenues, lawmakers have dipped into the reserve, reducing it from $730 million four years ago to about $330 million now.

This year, the budget-writing Appropriations Committee recommended  lawmakers start rebuilding the reserve. To do that, the committee proposed using just under half of the $51 million a year Gov. Pete Ricketts had recommended adding to a fund to offset people’s property taxes. Last year, that fund offset about $86 worth of property taxes for the owner of a $100,000 house. This year, with the increase Ricketts has proposed, that credit would rise to about $106.

Omaha Sen. Steve Lathrop supported the committee’s recommendation to direct half the money Ricketts had recommended for the property tax credit fund to rebuilding the cash reserve instead. “You don’t run your personal life with no savings account of some kind. This is our version of a savings account, and we’re going to need it. It’s just a matter of time before this country goes into another recession. And that’s not a ‘Who’s in charge in Washington’ thing. That’s just a fact,” Lathrop said.

But Sen. Lou Ann Linehan of Elkhorn, sponsor of legislation to raise other taxes in the hopes of reducing property taxes more than the governor’s proposal would, said the $50 million should be part of that effort, instead of being put into the cash reserve. “If we’re serious about property tax relief – which I think we all are, we need to make sure that the $51 million goes -- each year – goes to the property tax relief fund,” she said.

This was the vote on sending $50 million to the property tax fund, not the cash reserve.

Sen. John Stinner of Gering, chairman of the Appropriations Committee, defended the recommendation to put the money into the cash reserve, and scolded his colleagues. “What is wrong with you people? You should be long-term oriented, not short-term oriented. You should take care of the fiscal posture for the state of Nebraska,” he said.

Sen. Rob Clements of Elmwood supported using the $50 million for property tax relief. “Nebraska taxpayers are hurting. As a farm banker, I see farmers having trouble. And I also saw yesterday LB289 (Linehan’s tax proposal) may not pass – (it) didn’t have real strong support, in my opinion. And without that bill, this is the one other area that we can help property tax payers,” he said.

Sen. Adam Morfeld of Lincoln said when he campaigns door-to-door, people rarely bring up property tax relief as their number one priority. Instead, he said, they bring up things like health care, stagnant wages, tariffs and education costs. “Property tax relief is not the only priority in this state, and I would bet that for a lot of Nebraskans, maybe a majority of Nebraskans, it isn’t the number one priority,” he said.

Stinner eventually acquiesced in redirecting the money from the cash reserve to the property tax credit fund. But he made his opinion clear. “We’re going to put politics in front of prudence. It’s a bad tradeoff folks. That’s what Washington, DC does. Bad tradeoff,” he said.

Nevertheless, senators voted 28-8 to put the $50 million toward the property tax credit fund, not the cash reserve. Another 12 senators were present and not voting, which has the same effect as a ‘no’ vote. That was the only change they approved to the Appropriations Committee’s budget recommendation. They then gave first-round approval to the two-year, $9.3 billion dollar state budget proposal. Second-round debate is expected next week.








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