Tax package being shaped; lobbyist-provided meals to end
March 23rd, 2017
Proposals designed to limit agricultural property taxes and cut income taxes got some preliminary thumbs up in a Nebraska legislative committee Thursday. But their fate remains unclear, amid confusion over their ultimate effects.
Lincoln, NE – Meeting behind closed doors, with only senators, staff, and reporters present, the Legislatureâ€™s Revenue Committee began putting together a package of proposed tax changes it will present to the full Legislature.
One part is a proposal introduced for Gov. Pete Ricketts by Sen. Lydia Brasch, chair of the Ag Committee. It would change how Nebraska values ag property for tax purposes, from a system based on sales of comparable land, to one based on a calculation of how much income that land can produce. It would also limit ag land valuation increases to 3.5 percent a year.
The Department of Revenue says if the bill had been in effect for the last decade, ag land valuations would have increased just over 36 percent, compared to the actual increase of just over 250 percent under the current system. Sen. Curt Friesen of Henderson, a farmer, supports the bill, but says he doesnâ€™t think it will do much in the future.
â€œWe can look in hindsight at what that bill would have done if it had been in place 10 years ago. And it would have really solved agâ€™s problem in a big way. But when I look ahead I donâ€™t think Iâ€™ll ever see a spike in land prices like weâ€™ve just seen, so the impact is not going to be near as great looking forward as what it would have been when we look in hindsight,â€ Friesen said.
Sen. Burke Harr of Omaha opposed putting the proposal into the committee package. Â Harr said it could distort valuation of different types of property in the future.
â€œIt limits growth to 3.5 percent a year no matter how much the economy grows or doesnâ€™t â€“ it canâ€™t go beyond 3.5 percent a year. So you could have a situation where the economy goes double-digit inflation again, and then weâ€™ll have a disparity between residential, ag, and commercial,â€ Harr said.
Income taxes cuts are another part the committee voted to include in its recommendations. Bills by Sen. Jim Smith of Papillion and Brett Lindstrom of Omaha would combine the two lowest income tax brackets into one, reducing state revenues by an estimated $50 million. They would also reduce the highest income tax rate for individuals and corporations gradually over the next eight years, whenever state revenues were projected to grow at least three and a half percent a year.
Friesen said that wouldnâ€™t help farmers in bad years, but would be good for the state as a whole.
â€œOverall I look at lowering income taxes as always good for everyone. We stimulate the economy with it, hopefully, and we make ourselves a low tax, business friendly state,â€ Friesen said.
Harr also opposed putting the income tax reductions into the committee proposal. He said it could deprive the state of needed revenues if unexpected expenses come up. And he questioned who would benefit from the overall package of changes.
â€œThis is not a tax cut. This is a tax reform, which means itâ€™s revenue-neutral. And at this point, we donâ€™t know who the winners and losers are â€“ who is going to pay less in taxes, and who is going to pay more in taxes,â€ Harr said.
The committee still has to hash out proposed changes to the school aid formula before voting on sending the entire package to the full Legislature.
In legislative debate Thursday, senators gave final approval to a bill removing the stateâ€™s nearly century-old ban on teachers wearing religious clothing or symbols in public school classrooms. The vote was 39-5.
Also Thursday, Speaker of the Legislature Jim Scheer announced an end to the longstanding and sometimes-criticized tradition of lobbyists providing meals for senators when they work into the evening toward the end of the session.
â€œ I am not going to ask the lobbyists to be providing the meals. We are compensated for our food during the day from the state,â€ Scheer said. â€œMy office at some point will try to put together some type of a food process. Those of you that wish to participate (it) will just be x amount of dollars if you would like to participate. If you want to order your own Jimmy Johnâ€™s thatâ€™s fine. But weâ€™ll be providing our own food for the evening meal if we do go late in the evening.â€
Sen. Ernie Chambers, who has criticized the practice and sponsored a bill this year to prohibit it, hailed Scheerâ€™s decision.
â€œIâ€™m pleased that he did this, and it shows a recognition of the fact that senators ought not be accepting these freebies from the lobbyists even if nobody would be purchased for a meatloaf sandwich and a chicken dinner from a lobbyist — the appearance of impropriety is what we need to avoid,â€ Chambers said. â€œEven if no senator ever did anything that was inappropriate, legislators, congresspersons are not deemed to be the most reputable people in the world. So we donâ€™t need to do anything overtly to contribute to that image.â€
Scheer was asked if he took his action in response to a negative perception of the practice.
â€œProbably to some extent, but I really, from the years that Iâ€™ve been here, donâ€™t believe the perception is that there is any quid pro quo for the food that is being provided. But having said that, again, we are able to get reimbursement for our food so thereâ€™s really no reason to ask somebody else to purchase that food for us during that period of time,â€ Scheer said.
Scheer pointed out lobbyists have pooled their money, so senators donâ€™t know who is paying for a particular meal. Jim Otto, a lobbyist for the Nebraska Retail Federation who organized the late-in-the-session meals, said that in 2015, 54 lobbying firms contributed a total of just over $10,000 to feed 48 senators, not including Chambers, which worked out to less than $4 per senator per firm.
Otto said heâ€™d been asked to organize the effort by a previous legislative speaker, and had no position on whether it should continue or not. But he said Thursday he was happy to be fired from this particular job.
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