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LINCOLN — Four straight days of public input on Gov. Jim Pillen’s plan to lower property taxes while raising and expanding the sales tax made it clear there is more work to be done.
On Friday, several major businesses and local governments agreed that high property taxes are a problem, but said their support for the governor’s plan comes with strings attached.
The Nebraska Chamber of Commerce, a key player in major tax reform, is pushing for tighter limits on local government spending and the concept of “front-loading” property tax breaks that currently must be claimed on income tax returns. He testified that he supported the .
Tax increase, opposition to tax increase
But Chamber of Commerce President Alex Reuss said lawmakers would only accept Piren’s plan to cut $1 billion in property taxes if it didn’t involve a sales tax increase or a shift from real estate to sales tax. He said he could support it.
But the governor’s plan includes a 1-cent increase in the state sales tax and the elimination of sales tax exemptions for several items, including farm repair parts, accounting and legal services for businesses, and new taxes on ramune and candy. include.
Representatives from the state’s counties and cities testified they were “neutral” on Mr. Pillen’s proposal to set a “hard cap” on spending increases, which would end up at 2% a year unless voters decide to exceed the cap. It was to be limited to.
They said they would prefer a 3% cap on spending increases and more exceptions than the cap the governor allowed.
Fastest growing county opposes
Sarpy County Commission member Angi Burmeister testified against Legislative Bill 1414, a “hard cap” proposal that could lead to cuts to law enforcement and 911 services.
“As the fastest growing county in the state, we have some unique challenges,” Burmeister told the Assembly Ways and Means Committee.
Indeed, Friday’s hearing featured witnesses lining up to oppose his plan to eliminate sales tax exemptions, limit school spending and “wipe out” millions of dollars in state government reserves. , there was less negativity about the Piren project than previous public hearings on Tuesday, Wednesday, and Thursday. Fund his tax shift.
No wonder there is opposition
State Sen. Lou Ann Linehan, R-Elkhorn, who helped develop the bill as a member of the governor’s tax reform task force, said Friday she was not surprised that groups opposed parts of the plan. .
Linehan and Pillen said state lawmakers need to ignore lobbyists and respond to ordinary Nebraskans who criticize the state’s property taxes, which are among the highest in the nation.
Conservative groups such as Americans for Prosperity also joined the state Legislature to oppose the tax shifts and increases in Pillen’s plan, arguing that tax shifts are not tax cuts. Even at the business-friendly Pratt Institute, parts of the plan were generally disliked.
On Friday, farm groups endorsed Pillen’s proposal, which has traditionally required the support of both farm and business groups to pass major tax bills. Apparently not.
Despite this, Linehan remained optimistic.
“I truly believe that if you said we were going to cut property taxes by 40% and tax other things, they would say, ‘Let’s do that,’” Linehan said.
“All Nebraskans expect real change, real reform,” Pillen said in remarks at a Ways and Means Committee hearing.
“They’re tired of being told they got property tax relief. … This solves it,” he said.
One of the most interesting exchanges during the afternoon hearing came when representatives from the state Legislature, along with the Omaha and Lincoln Chambers of Commerce, testified against a bill enacting the state’s four-year business incentive program, Imagine Nebraska. was. Let’s act with more emphasis on people.
Opposing changes to ImagNE law
Representatives from the Chamber of Commerce, economic development groups, Kawasaki Motors of Lincoln and prominent Omaha tax attorney Nick Nieman all say it’s too early to change the law and cut some of its benefits. He warned that this would hurt business. Recruitment and expansion.
Critics also complained that business groups were not involved in writing the bill, unlike other economic stimulus bills in years past.
Linehan, who introduced LB 1410 on the governor’s behalf, was visibly upset and questioned the opposition from businesses. She said the government has been pushing for generous tax breaks for years because Nebraska’s taxes, especially income taxes, are too high.
But last year, the state Legislature passed significant tax cuts that gradually lowered the state’s top individual and corporate income rates from above 6% and 7% to 3.99%, she said.
“I don’t agree with it at all,” Linehan said of the opposition to LB 1410.
The bill also includes new incentives for employers to help pay for child care and employee housing, two priorities identified by Pillen’s task force on the state’s workforce shortages.
Other aspects of Pillen’s tax and workforce plan that will be the subject of Friday’s hearing include:
LB1394: Income earned while serving in the Nebraska National Guard is exempt from state income tax. The $2 million in savings translated into an average savings of $400 per Guard Soldier.
The bill is envisioned as a way to support recruiting efforts in the Nebraska Army and Air National Guard, which have slumped in recent years. Officials said the Guard is now at about 92% of its authorized strength due to changing societal attitudes toward the military and a tightening labor market.
LB1400: Tax credits will be provided to employers who help pay relocation costs for new employees making between $70,000 and $250,000 annually. The bill also allows new employees to be exempt from state income taxes for two years.
The proposal was portrayed as helping to address the state’s labor shortage.
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