Cities may lose permission for sales tax hikes; childrens' mental health screens advance

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May 16, 2013 - 5:36pm

The Nebraska Legislature appears to be moving toward taking back the permission it gave cities last year to increase sales taxes. And lawmakers gave first-round approval to a pilot program for identifying kids with mental health problems.

Last year, over a veto by Gov. Dave Heineman, the Legislature gave cities permission to increase their maximum sales tax rate from one and half cents to two cents on the dollar. To do so, local governments have to get approval from 70 percent of the city council and from a majority of city voters voting in an election.

Omaha Sen. Ernie Chambers has made repealing that permission one of his priorities this year. His bill to do that was opposed by the Nebraska League of Municipalities and remains bottled up in the Revenue Committee.

Thursday, Chambers tried a new tack. He tried to attach the bill as an amendment to another tax bill that would reduce taxes on businesses and upper income individuals. Chambers said sales taxes are regressive. "Every time the sales tax is put in place, there is no escape for the poor. A greater percentage of what they have is taken. There is no way to replace it. So in addition to an amount being paid by them that a rich person would have to pay, they have less remaining than what a rich person has. Less percentage-wise, less absolutely speaking in terms of numbers," he said.

Among those supporting Chambers’ amendment was Sen. Brad Ashford of Omaha. "Our restaurant tax is nine percent. If we add another half a percent sales tax, it’s not going to happen in Omaha cause they’ll never do it," said Ashford.

That is a far cry from last session, when Ashford led the charge to let cities increase sales taxes. At the time, he argued "The point is to let the cities do what they wish. And to let my constituents have a say in what tax policy in our city is." Ashford said Thursday things have changed, and the Legislature is about to undertake a study that could fundamentally reshape the state’s tax system.

Norfolk Sen. Jim Scheer used the study as an argument not to repeal cities’ permission to raise sales taxes. Scheer said city sales tax increases have to be approved at a primary or general primary election, and there won’t be any until May of next year. By that time, he said, the Legislature will have finished its tax study and had the chance to enact any changes it recommends. "Right now, this (permission) is something that is in place. It was passed by this body. It is no different than all the rest of them – our sales tax from a state perspective, our income tax rates, all of those are on the table. And so is this.

"So why are we trying to take this and this alone off the table, other than Sen. Chambers does not like sales tax?" Scheer asked. "That’s what we’re talking about. That’s what this bill is about."

When the time came to vote, Chambers got 24 votes for his amendment, one short of the number needed. Sen. Beau McCoy of Omaha then switched to not voting, which allowed him to ask for the vote to be reconsidered. That is scheduled to happen Monday, and although he didn’t say how, Chambers says he believes he’ll have enough votes then.

On another matter, lawmakers gave first round approval to a proposal by Lincoln Sen. Amanda McGill to establish three pilot programs around the state designed to identify and treat mental health problems among children. McGill said the proposal differs from her original bill, which would have required mental health screenings as part of the physical exams children are required to have before entering school. "We have left it optional for now. There are states like Minnesota that requires screenings to get into kindergarten," said McGill. "I didn’t feel that we are quite there to require it yet. I saw the concerns that parents were having. And so I think that we should look at what kind of results we’re seeing from these optional screenings, how many parents are choosing to be a part of them, and move forward from there."

The pilot programs would allow the clinics and the children to consult with the staff at the University of Nebraska Medical Center in Omaha via secure telephone hookups. The two-year experiment would cost a little more than $900,000. Senators voted 35-0 to give it first round approval.



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