Lower Car Taxes, Hands-Free Cellphone Requirement While Driving Get Public Hearings

A proposal to lower taxes on motor vehicles ran into opposition from local governments that rely on those taxes, and a proposal to prohibit hands-on cellphone use while driving got a public hearing.

Sen. Robert Hilkemann of Omaha is sponsoring the proposal to lower taxes on motor vehicles. Hilkeman, a retired podiatrist, said he’s heard lots of complaints about Nebraska’s high car taxes.

“I would have patients who came in who were new to the state of Nebraska or new to Omaha, and I would often ask them ‘Well, tell me how you’re liking Nebraska?’ And I cannot tell you how many times people would say ‘Well, I’m liking it but I can’t believe how much it costs to license a vehicle,’” Hilkemann said.

Hilkeman said Nebraska motor vehicle taxes rank between the third highest and 7^th highest in the nation. He said if someone buys a 2021 Chevy Impala, two years from now they’ll be paying almost $500 a year in taxes in Omaha, compared to less than $400 in Denver, about $330 in Des Moines, and only $42 in St. Louis.

Currently, Nebraska taxes on new vehicles in the first year are based on their manufacturers’ suggested retail price, or MSRP, then the value for tax purposes is reduced by 10 percentage points for each of the next four years. Hilkemann said that’s unrealistic.

“I would maintain that very few people today pay 100 percent MSRP…and then the second thing we do is in the second year, we charge 90 percent of MSRP. Now I don’t know about you, but I’ve never had the opportunity to own a vehicle that only depreciated 10 percent in the first year. Most of mine depreciate 20 percent just going out the door,” he said.

Hilkeman’s bill would start out taxing vehicles on 90 percent of their MSRP, and would lower the tax rate more quickly over the ensuing years, although unlike the current system, it would continue taxing vehicles 14 years old or older. The Department of Motor Vehicles estimated a loss of nearly $60 million a year if the proposal were fully implemented. Nearly 60 percent of that would otherwise go to schools, who would lose it, but because of the way the state aid formula works, they would be entitled to increased state aid.

Most of the rest of the revenue would be lost by counties and cities, who showed up to oppose the proposal. Among those testifying was Jon Cannon, who represents the Nebraska Association of County Officials.

“The reason that we’re here is, as you know, counties tend to be a little bit allergic to any loss of revenue. And in this fiscal note, you’ve seen exactly how much that is. It’s going to be significant to us,” Cannon said.

That fiscal note, on the tax impact of the bill, estimated that counties would lose between $15 million and $16 million a year. Jack Cheloha, opposing the bill on behalf of the city of Omaha, estimated it would cost that city about $1.5 million a year.

But Hilkeman asked the committee to “tear up” that fiscal note and rework the bill, saying what he really wants to do is make the system more fair. He said that could involve lowering the taxable value of newer vehicles, while raising it for older ones. That Sen. Mike Moser to ask if Hilkemann’s proposed change would favor people who own newer cars.

“Yes, it would, because … the older cars would be being brought up a little bit. That’s correct,” Hilkemann replied.

The committee also heard testimony on another Hilkemann proposal, to prohibit using a cell phone other than in hands-free mode while driving. It’s already illegal in Nebraska to text while driving, but it’s not illegal to talk while holding the phone. Hilkemann said the change would relieve law enforcement officials of the task of determining whether someone was texting, talking or or scrolling through Facebook if an accident occurred. And he asked committee members to think of their own observations.

“How many times have you been driving and you see someone on the other side with that phone right there in the center where the horn is and they’re just fiddling away with that phone?” he asked. “That’s what we’re trying to do away with with this legislation. There’s no way you can be fiddling with that phone and still be concentrating on the road ahead.”

The bill drew support from Robert Bell of the Nebraska Insurance Federation.

“We have noticed that there has been an increase in distracted driving in Nebraska,” leading to more accidents, property damage and injuries, Bell said.

Eric Koepke of the National Safety Council, another group supporting the bill, cited a study that said 17 percent of all accidents involved cell phone use within five seconds preceding the accident.

No one testified against the proposal.

The bill would make using a cell phone while holding it a secondary offense, meaning a driver would have to be stopped for another offense in order to be charged. Violators would be fined $200 for a first offense, $300 for a second offense, and $500 for a third.

The committee took no immediate action on either bill.