Would voters raise their sales tax?
April 12th, 2011
Lincoln, NE – Voters in cities across Nebraska could find themselves being asked about raising the sales tax they pay, under a proposal advancing in the Legislature.
Until now, the Legislature has been all about cutting tax revenues for Nebraska cities: doing away with a wheel tax that Omaha was planning to impose on commuters, scotching a phone equipment tax Lincoln was counting on, and eliminating state aid to cities, counties and natural resources districts. But now, lawmakers are moving ahead with a measure that could allow tax increases that would dwarf those cuts. On a vote of 27-14, they gave first round approval to a measure that would allow cities to increase their sales taxes by half a percent, if voters approve. Among those supporting the proposal was Senator Tom Carlson of Holdrege.
â€œWe as a Legislature … have tied one arm behind our countiesâ€™ and municipalitiesâ€™ backs, when we cut state aid. Now if we donâ€™t give them some taxing authority, I think we tie the other arm. Itâ€™s kind of hard to negotiate, itâ€™s kind of hard to work, itâ€™s kind of hard to plan with both arms tied behind your back.â€
But Senator John Harms of Scottsbluff said the proposal merely letâ€™s cities get bailed out, rather than making tough choices on spending.
â€œIâ€™m not convinced that in any of these cities and any of these counties as they are today, that they are going to be hurt, that theyâ€™re going to close their doors,” he said. “What itâ€™s going to force them to do is put together long-range planning. Show me what theyâ€™re going to cut. Show us whatâ€™s going to be done. Show us that theyâ€™re going to be able to streamline this government. Thatâ€™s what people want.â€
Senator LaVon Heideman of Elk Creek also opposed the bill. He said letting cities increase their sales tax to two percent, on top of the stateâ€™s 5.5 percent, would hit the ceiling of political approval. And that would eliminate any chance of the stateâ€™s tapping more sales taxes if it needed them for schools or health care in the future.
â€œThis, to me, is eroding the stateâ€™s sales tax base that eventually we might need, we might have to access, that we will have to have the political will to say â€˜We need this. Weâ€™ve cut enough. We canâ€™t do any more.â€
Senator Brad Ashford of Omaha, chief sponsor of the bill, denied it amounts to a tax increase.
â€œIt is not a tax increase,” he said. “Itâ€™s giving the voters an opportunity to have a conversation about spending.â€
Following the billâ€™s advance, Ashford said he expects an amendment at the next round of debate that would require any city proposing to raise sales taxes to give voters a limit on how long the increase would last. Ashford also described the 27 votes in favor of the bill as a â€œstrongâ€ showing. But it may need more than that. While he has not explicitly threatened a veto, Governor Dave Heineman has criticized the bill, saying he doesnâ€™t want taxes increased on Nebraskans wherever they live. If he were to issue a veto, it would take 30 votes to override.
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