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Nebraska lawmakers adjourned Tuesday in mid-debate over what to do about the fees and taxes imposed on cellphone services in the state.

Sen. Tony Vargas said Nebraskans are fourth in the U.S. when it comes to cellphone taxes, a total of 18.75% each month.

The Omaha senator introduced a bill (LB550) to eliminate the occupation taxes applied to wireless users and require a vote of the people to restore the tax — a measure Vargas said would provide more transparency in how a municipality uses the revenue it generates.

"I contend this is a very prudent, pragmatic pathway forward," Vargas said, adding his bill would help the state "begin to crack down on this high tax" that disproportionately affects lower-income Nebraskans.

But the loss of a revenue stream to cities and towns would likely result in higher property taxes, said senators who voiced opposition to Vargas' bill Tuesday.

The city of Lincoln collects roughly $4 million annually in wireless occupation taxes, which is funneled into the $172 million general fund to maintain city services such as public safety and streets.

"In the city of Lincoln, if we lose $4 million, it's coming from somewhere," said Sen. Adam Morfeld. "You know where it's coming from? It's coming from property taxes."

Sen. Matt Williams of Gothenburg and Sen. Mike Moser of Columbus also said eliminating the revenue produced through the wireless occupation tax would result in drastic cuts to city services or steep hikes in property taxes to towns of all sizes.

But Vargas said his bill, as well as the accompanying amendment from the Transportation and Telecommunications Committee, would provide voters living in those municipalities a chance to set the tax rate.

He said it would be incumbent on cities to show how they planned to use the tax, and if voters found the proposal worthy, they would vote for it.

Omaha Sen. Justin Wayne, who backed Vargas' proposal, said he was working on an amendment that would leave existing wireless occupation taxes in place, but would require a vote for any new tax or tax increase.

No action was taken Tuesday. Wayne's amendment will likely be taken up Wednesday morning when the Legislature reconvenes for Day 61.

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Reach the writer at 402-473-7120 or cdunker@journalstar.com.

On Twitter @ChrisDunkerLJS.

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Higher education reporter

Chris Dunker covers higher education, state government and the intersection of both.

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