Lawmakers debate wheel tax


January 31st, 2011

Omaha, NE – Nebraska lawmakers continued the debate Friday on whether cities should be allowed to impose wheel taxes on commuters.  The discussion is pitting Omaha senators against many of their statewide colleagues.

Sen. Abbie Cornett of Bellevue wants to make it illegal for a city to impose a wheel tax on nonresidents (Photo courtesy Nebraska Legislature)

When Omaha introduced a $50 wheel tax on nonresidents who commute to work in Omaha, it was an unpopular move with surrounding cities, and some have filed legal challenges against it. The tax was passed to take effect at the first of the year and to increase revenue for Omaha road maintenance, which is currently allowable by law. Newly elected State Senator Bob Krist of Omaha challenged Senator Abbie Cornett of Bellevue, who introduced the bill to change that law. He asked if the bill, which is retroactive to take effect January 1st, directly targets Omaha.

“It is not targeted at Omaha,” Cornett said. “It’s targeted at the people who live outside the jurisdiction to keep them from paying a tax in a jurisdiction they do not live in.”

“Semantically, it’s targeted at the people who make decisions in Omaha,” Krist responded.

“Senator Krist, it sounds like you’re trying to pick a fight with me,” Cornett said. But Krist interrupted her to say, “Absolutely not, I’m just trying to put it on the record that this is targeted at Omaha.”

“It’s targeted at bad tax policy,” Cornett countered.

Senator Brad Ashford of Omaha urged the Legislature to consider the city’s financial situation, and the burden repealing the tax would take. He said Omaha didn’t have many alternatives to boost revenue.

“The alternative was to raise sales tax,” he said, “but of course the Legislature won’t give us the authority to raise sales tax.”

Ashford asked the Legislature not to “put the city of Omaha in any more jeopardy than it already is.”

“If you’re going to change the wheel tax, don’t do it in the middle of a budget year,” he said. “Give the city of Omaha the opportunity to react.”

But the Senator from Bellevue countered there are many other revenue options, and noted Omaha could still raise property taxes, while many other Nebraska cities have hit their tax lids.

“We all understand the financial situation the city of Omaha is in,” Cornett said. “We all understand their unfunded pension liability.” But, she emphasized, “That is their unfunded pension liability.”

Concerns were also raised about how the tax would be collected. Omaha Senator Brenda Council noted the city already has a tax in place for nonresidents within a three mile radius, and has been able to collect it since 2006. The debate took up all of the morning at the Capitol. Lawmakers adjourned without taking action, and will likely return to debate next week.

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