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Last week three Legislative Committees held a joint hearing on LB 289. The Revenue Committee, the Education Committee and the Retirement Committee all participated in this hearing that lasted from 4 p.m. to 10:50 p.m. It was a long one. I am on all three of these Committees.
LB 289 is an attempt to provide property tax relief and restructure how schools are funded without changing the current “needs” formula. Senator LouAnn Linehan filed AM 1381 that becomes the bill so the hearing addressed both. There were a four proponents in favor of the bill and many opponents.
After the hearing a revised version, AM 1572, was filed. AM 1572 to LB 289 proposes to raise the state sales tax rate from 5.5% to 6%. It raises the cigarette tax from 64 cents per pack to $1.00 per pack. (There has been attempted almost every year for the last decade to raise the cigarette tax.) The increased revenue from these proposed rate increases will be credited to the Property Tax Credit Cash Fund. The proposed operative date is July 1, 2019.
The amendment repeals the Personal Property Tax Exemption beginning in tax year 2020. AM 1572 also proposes to repeal the sales tax exemption for a number of services. The most harmful items are car repairs and home repairs. Beginning tax year 2020, the amendment proposes to reduce taxable value for residential and commercial/industrial from 100% of market value to 90% of market value. Agricultural and horticultural taxable value would be reduce from the current 75% of market value to 65% of market value. The proposed reduction in the taxable value for residential and commercial/industrial land reduces the acceptable range for valuing the property to 82% to 90%, instead of the current 92% to 100%. The acceptable range for agricultural land would reduce to 59% to 65% of actual value from the current 69% to 75%.
The amendment also changes allowable levy rates for school funding and creates a “basic” funding mechanism similar to what we used to call foundation aide so that the state aid to schools would actually increase and school districts would have less dependency on property tax. There are many other details in the bill – too numerous to explain in this article. The Committee has now advanced the bill to General File with AM 1572. Debate on it will begin next Tuesday, May 7, at 1:30p.m. I will be analyzing the bill and consulting with constituents over the weekend.
I commend the effort to find property tax relief and to fully fund schools. It’s a tall order and no one knows yet if this is the right combination to pass the Legislature. More information and all things related to the Nebraska Legislature can be found at nebraskalegislature.gov. The Unicameral Update newsletter is found in the “For Citizens” menu on the left side of the home page under “Legislative Publications.” As always you can contact me via email at email@example.com and by phone at 402-471-2327.