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Last week, the governor presented his tax relief bill to the Revenue Committee. Sponsored by Papillion Senator Jim Smith, it would permanently and immediately cut the top income tax rates for individuals and corporations. It would also stair step property tax relief to be implemented over the next 13 years. It funds this relief by eliminating the property tax credit fund and with unspecified future state revenue. I have my concerns about that approach, but I understand that the proposal is still being adjusted.
This week, I will present my education funding/property tax relief bill, LB 1084, to the Revenue Committee. LB 1084 will provide immediate and substantial property tax relief, specify funding sources for that relief, reaffirm our commitment to funding education, provide soft property tax asking caps to help ensure lasting property tax relief, and it will call for a comprehensive study of K-12 funding in Nebraska. Many of the components are still in play, and I anticipate changes to some of the details I describe below.
Instead of kicking the can down the road, LB 1084 would generate revenue to pay for property tax relief from a variety of sources. It would sunset several sales tax exemptions and eliminate various exclusions. It would increase the sales tax rate by ½ cent, and raise the cigarette tax to mirror the national average. It would reinstate the alternative minimum tax and eliminate income tax loopholes commonly known as the Subchapter S exclusion and the Special Capital Gains exclusion. It would impose a modest surtax on our very highest income earners. It would sunset the New Markets Job Growth Investment Act and the personal property tax exemption. It would also direct internet sales tax revenue to property tax relief.
With this revenue, the bill would reinstate the 20% allocated income tax to our schools, and replace the TEEOSA cuts of last year’s LB 409. It would then nearly quadruple the amount in the Property Tax Credit Fund.
All of the above would be accompanied by a limit on K-12 property tax asking increases equal to the higher of 2.5%, the rate of inflation, student growth, poverty growth, or ELP growth. The allowable property tax asking would also be lowered by any amount other revenue sources increase, or increased if those sources fall off. These limits could be surpassed by a 75% vote of the school board, or a public vote.
Finally, LB 1084 would call for a comprehensive study of school finance in Nebraska.
I believe that LB 1084 is the responsible approach to property tax relief. It can help us to alleviate the inequities in our school funding structure, and our tax structure itself.
Finally, my office will have an opportunity coming up this summer for someone who is interested in the workings of the Legislature and would like to start down a path in policy in Nebraska. Please keep an eye out for further details in my upcoming columns.
If you need to get in touch, the best way is to call my office and speak with my staff (or leave a message if you call over the lunch hour) at (402) 471-2631. My legislative website is news.legislature.ne.gov/dist41/ and my facebook page is at facebook.com/SenatorTomBriese