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The bill that contains the Governor’s proposal for tax relief was heard before the Revenue Committee this past week. LB 947, introduced by Papillion Senator Jim Smith, at the request of the Governor, drew a room full of interested persons offering testimony for four hours. In his opening, Senator Smith acknowledged that the legislation was short of perfection and stressed that it was a work in progress.
As introduced, LB 947 would offer property taxpayers a refundable income tax credit equal to 10% of property taxes paid. For taxable year 2019 and thereafter, if actual net General Fund receipts are at least 1% above certified estimated receipts, the percentage of property tax relief would increase by 2%, not to exceed 30% of property taxes paid. Residential homeowners’ income tax credit would be capped at $230 the first year, increasing by up to $50 each time the percentage is increased, up to a maximum of $730. For agricultural land owners, there is no cap on the refundable income tax credit.
LB 947 would also reduce the top rate of the individual and corporate income tax from 6.84% and 7.81%, respectively, to 6.69% over a two-year period. Furthermore, workforce development would be bolstered by a $10 million appropriation.
To pay for the tax relief proposed under LB 947, the legislation would eliminate the Property Tax Credit Program currently offered to property taxpayers, reflected on their tax statement, and the Personal Property Tax Relief Act, recently passed by the Legislature.
Governor Ricketts was the first proponent to testify on LB 947. He offered an amendment to strengthen the property tax relief provisions in the bill. His amendment would eliminate the trigger mechanism for increased property tax relief, instead placing the increases in statute. Under the amendment, the property tax relief would begin at 12% of property taxes paid, increasing by 2% every two out of three years, until reaching 30%. The Governor suggested using the cash reserve fund to pay for the additional property tax relief in the upcoming budget cycle. The question of how to pay for future years of escalating property tax relief is not addressed.
As amended, the Nebraska Farm Bureau and some other farm organizations, offered their support – contingent on the property tax relief increasing to 30% of property taxes paid. This is the approximate level of property tax relief proposed in LB 829, offered by Senator Steve Erdman, and in the initiative petition drive getting underway.
Public hearings were held on two of the bills that I introduced. On Tuesday, the Transportation and Telecommunications Committee heard LB 980, which would allow for overwidth permits (not to exceed 12 feet) to transport hay bales on the Interstate. The Nebraska Department of Transportation offered a letter in support of the bill and a representative of the Nebraska Farm Bureau testified in support. The Federal Highway Administration is not opposed to this legislation. Surrounding states allow for such permits and I believe Nebraska should follow suit.
On Thursday, the Revenue Committee heard testimony on LB 745, which deals with the refund of local option sales tax in situations when sales or use tax has been overpaid and must be refunded due to an error in collection or computation. The bill would require the Department of Revenue to give advance notice to the municipality and would allow for repayment in 12 monthly installments. The City Administrator for Nebraska City testified in support, as did the Executive Director for the League of Nebraska Municipalities. Nebraska City recently got hit with a large refund and this bill would give cities more opportunity to plan for the necessary budget adjustments. Committee members noted that this has been an issue statewide for a number of years.
We are one-third through this legislative session. I urge you to contact me with your thoughts and opinions. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number is (402) 471-2733.