Senators discuss whether tax proposal provides relief or just shifts things around
March 16th, 2017
Senators in the Nebraska Legislature continued to discuss possible changes to the state’s tax system Thursday. Supporters say one proposal being considered could lead to long-term tax relief. But some skeptics question whether it would really do more than just shift things around.
Lincoln, NE – The Revenue Committee, which is trying to come up with a tax reform package, met for nearly two hours Thursday. The focus was on a proposal by North Platte Sen. Mike Groene.
Groene wants to take money from an existing property tax credit fund. That’s the fund that currently offsets a portion of every property owner’s taxes – about $90 on a $100,000 house, or about $900 on a farm valued for tax purposes at a million dollars.
Groene, chairman of the Education Committee, wants to redirect that money to the largest user of property tax dollars – schools. In an interview after the Revenue Committee meeting, Groene said his goal to “make sure that everybody who pays income taxes and sales taxes in the state gets some of it back to run their schools,” and that no school district gets more 60 percent of its funding from property taxes.
For districts that currently rely on property taxes for more than that, Groene would use state sales and income tax dollars to make up three-quarters of the difference.
Groene gave the example of a school district with a budget of $10 million that currently gets $8 million of that from property taxes. Under his proposal, those property taxes would be reduced to $6 million, with the state making up $1.5 of the $2 million difference. The rest would be up to the local school board to decide if it wanted to cut the budget or get the remainder from property taxes.
Sen. Paul Schumacher of Columbus said the plan raises basic questions for him.
“How does it affect real people? And to say ‘Well, we’re going to take property tax credit money and move it from this fund to that fund to distribute it, leads me to the question of ‘Well, okay if I’m a farmer in a mostly farm county or district, is my tax bill – my total tax bill from everybody for property taxes– going to go up or down?’” Schumacher said, adding that the same question holds for city dwellers and others as well.
Groene’s bill would take an estimated $160 million from the existing property tax credit fund. Sen. Burke Harr of Omaha said that raises another question for him.
“I think my main concern is if the property tax relief fund has $220 million in it, approximately, and Sen. Groene’s property tax relief bill takes money from there for property tax relief but only takes $160 million and I don’t know what happens to that other $60 (million) if it goes back to the general fund or if it is applied in other areas or if goes back to further property tax relief. I think we need to answer that question first,” Harr said.
Groene said he’d like to use all $220 million for schools. “I want it all. But we’ll see how the negotiations go,” he said.
Groene said his idea is preferable to the existing property tax credit program, because that credit helps other local governments — like cities, counties and natural resource districts – “mask” tax increases.
But Schumacher said a taxpayer’s bottom line is more important than how the state gets there. “If my tax bill doesn’t appreciably change, then we’re going through a lot of paperwork for nothing,” he said.
Revenue Committee Chairman Sen. Jim Smith of Papillion has said he wants the committee to come out with a package that also cuts the state income tax. The committee is scheduled to resume deliberations on Monday.
Meanwhile, in legislative debate Thursday, lawmakers gave second-round approval to a bill that would end the state’s ban on teachers wearing religious clothing, like a Catholic nun’s habit or a Muslim woman’s hijab, in public schools. The vote was 41-1, with only Omaha Sen. Ernie Chambers opposed.
Lawmakers also began second round debate on a bill that would authorize “Choose Life” specialty license plates for motorists who want them.
Chambers, who opposes the plates, took up most of the debate time filibustering against the bill. But one senator, Anna Wishart of Lincoln who voted for them after the first round of debate said she had changed her mind. Wishart said with enough support, people who want the plates could get them without legislative action.
“Whichever organization would like to see a “Choose Life” license plate could come together. It’s a $75 fee per person, I think you have to have 250 people, and they could get this license plate And since we have so many other priorities, including the budget, strengthening our education system, our child welfare system, I just really think the Legislature needs to get out of the business of debating and working on license plate bills,” Wishart said.
It would take 33 votes to break a filibuster and vote on the bill. Supporters had 36 on the first round of debate. With Wishart changing sides, it would take three more senators dropping their support to stop the bill. The next vote is expected to take place around 10 Central Time Friday morning.