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The public hearing on the amendment to LB 289 that contained the Revenue Committee’s proposal for property tax relief was held April 24th before the Revenue, Education, and Retirement Committees. The public hearing started at approximately 4:00 p.m., after the Legislature adjourned early, and finished at 11:00 p.m. More than sixty people spoke at the hearing, with only four testifying in support of the measure.
Senator Lou Ann Linehan, the chair of the Revenue Committee, explained the amendment, which was introduced in an effort to provide long-term property tax relief for all Nebraskans. Nebraska places well among states in per pupil K-12 school spending. However, in terms of state funding as a percentage of overall funding, we rank 46th. Unsurprisingly, Nebraska ranks 3rd from the highest for local funding of our schools. With the proposed amendment, Nebraska would increase from 46th to 20th, when comparing state support for K-12 schools with other states. The proposed amendment would establish a foundation aid factor, amounting to a per student state revenue contribution of $3,474 per student for the 2019/2020 school year. The proposal would also lower the local effort rate in the school state aid formula and reduce the valuation of property by ten percent. It guarantees that every school district will receive at least one-third of its formula needs from state aid. School spending would be limited to the CPI inflation rate.
Most of the testifiers commended the committee for their work on property tax relief, but proceeded to criticize the portion of the plan that affected them or the people that they represent. The largest school districts warned that it would reduce their funding, realtors fought the increase in the documentary stamp fee, veterinarians feared the imposition of sales tax on services for pets, farmers resisted the loss of the Property Tax Credit program, cities lamented the reduction of property tax revenue, grocery store owners rejected the collection of sales tax on candy, pop and bottled water, and convenience store owners opposed the increase in the cigarette tax.
From studies I’ve seen, Nebraska ranks high in property tax burden among the states, about average in income tax burden, and somewhat low in sales tax burden. The proposed amendment to LB 289 seeks to increase the state’s sales tax rate from 5.5% to 6.25%, eliminate a couple of sales tax exemptions, and tax a limited number of services, in order to fund the property tax relief measure. I would rather see further broadening of the sales tax base than an increase in the sales tax rate.
In light of the opposing testimony, the Revenue Committee is meeting in executive session in an attempt to alter the funding sources for the property tax relief plan. Discussions have included retaining the current Property Tax Credit program (that gives $224 million worth of relief to taxpayers and is reflected on their property tax statements), eliminating more sales tax exemptions, and lowering the proposed sales tax increase.
The Legislature debated Senator Ernie Chambers’ annual bill to repeal the death penalty this past week. After approximately three hours of debate, LB 44 failed to advance to the second stage of debate on a 17-25 vote. In 2016, voters overturned the Legislature’s repeal of the death penalty. Most senators felt it was too soon to attempt to change this, as it would ignore the will of the people.
I am continuing to work with local officials, NEMA and the Department of Transportation on the bridge projects and water issues, due to the recent flooding. I can assure you that state officials have prioritized these projects.
The Legislature will start meeting into the evening in order to get our work accomplished by the early part of June. I still encourage you to contact me with your thoughts and opinions on legislation before us. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My telephone number is (402) 471-2801 and my email address is email@example.com.