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We are now in the home stretch in the Legislative Session with only 3 days remaining to complete the 60 days requirement.Last week there was a compromise bill brought to the floor (LB 1107) that dealt with property tax relief, tax incentives for businesses, and a $300 million contribution to a new hospital for the University of Nebraska Medical Center.
This bill has been promoted as the Great Compromise. The bill combines three pieces of legislation, regardless of previous opposition to each of them, into a single bill. What this Christmas tree bill accomplished was to paint everyone in the Legislature into a corner. None of these three bills ever had enough support to stand on its own merit.
This is a very poor way to pass legislation. The property tax portion of the bill is not property tax relief at all. Instead, it is a reduction in the increase of your property taxes. As a case in point, consider that property taxes state wide have increased substantially more annually than the 125 million dollars that the relief package would give. For instance, last year property taxes state wide increased 200 million. Consequently, property taxes under LB 1107 last year would have increased by 75 million dollars statewide. So you see why I don’t refer to this bill as property tax relief. Relief to me means I pay less than I did the year before.
The method these Legislators have chosen to use for refunding property taxes is an income tax credit or refund on the taxes paid to your public school. It is a very small percentage of that amount. In fact, it may be enough for you to eat out once or twice. To the contrary, I had a constitutional resolution in 2018 (LR 3 CA) that was based upon the same idea, except that mine was an income tax credit of 50 percent of the taxes paid to your public school. So, when the concept of an income tax credit or refund was my idea, it wasn’t any good, but when the Super 7 group of Senators comes up with the same idea, but for a significantly smaller amount, it is suddenly a good idea.
This bill is 149 pages long. One rural Senator said that this was a very well-thought-out bill; it was not just thrown together. Because the Senators in the Unicameral only had 10 hours to read these 149 pages before debating them on the floor of the Legislature, the whole situation reminded me of what Speaker Nancy Pelosi said in the U.S. Congress in 2010 about the Affordable Care Act when she said, “We have to pass it in order to find out what’s in it.”
We have had numerous bills to deal with in the last 10 days. It is difficult to deal with all of those bills and begin studying and understanding a 149 page new bill overnight. Consequently,
I have asked proponents of this bill seven or eight times from the floor of the Legislature about how it is to be funded. They claim that we must somehow find the 125 million dollars in order to be able to afford this property tax relief measure. When it is an income tax credit, the state does not need to refund the taxpayer for the property taxes paid. Instead, the state simply eats the cost by taking in less money through income taxes. And that is exactly what happens with business incentives.
Here is my dilemma. The business incentives earned in this bill will be an income tax credit as well. We have never mentioned once that we must first generate the revenue to fund these tax incentive programs for businesses. No one, not even the chairman of the appropriations committee, wants to answer why it is one way for a property tax refund and another way for business incentives? I will have more to say on this matter.