Sen. Steve Erdman of Bayard on Thursday urged the Legislature's Revenue Committee to give voters an opportunity to mandate a $1.3 billion reduction in property taxes.

Erdman's proposal (LR3CA) would allow Nebraskans to vote on a constitutional amendment providing for a refundable state income tax credit equal to 35 percent of a property owner's local property tax bill.

The property tax is "the most hated tax in the world," Erdman told the committee, and approval of his proposal would "make a million or so people happy" in Nebraska.

The Erdman plan is perhaps the most dramatic option that the Legislature has on its plate as senators tackle the vexing issue of property taxes as the major item on a full menu of proposed tax reform.

"We've been talking about this for a minimum of 40 years," Erdman said, "and we nibble at it," now with periodic increases in the state's property tax credit fund.

"Whether you're 18 or 80, whether you live in Omaha or Scottsbluff, property tax is the No. 1 problem," he said. "And it's time we give the people an opportunity to speak."

In earlier committee action, a parade of military veterans and their advocates lined up in support of legislation that would exempt 50 percent of all military retirement benefits from the state income tax.

The bill (LB153) was sponsored by Sen. Tom Brewer of Gordon at the request of Gov. Pete Ricketts.

Brewer, a decorated veteran who was twice wounded in combat in Afghanistan, said the measure will encourage veterans to stay in Nebraska after they retire and over time increase the state's revenue base. 

"A steadily growing population of military retirees will increase revenue," Brewer suggested.

Both Brewer and the governor told the committee that the bill, in effect, represents a workforce development measure as well as a proposal that provides tax benefits for veterans that they already can access by living in neighboring states.

Military personnel often retire at an early age and embark on a new career, the governor said, and Nebraska would benefit if they remain here. 

Ricketts said 29 states have some sort of tax exclusion for military benefits. 

Neighboring Iowa was cited as a state that does not tax military retirement benefits at all.  

The proposal would reduce state revenue by an estimated $4.8 million in fiscal 2019-20 and by almost $17 million over the coming fiscal biennium, according to a legislative fiscal analysis.

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Reach the writer at 402-473-7248 or dwalton@journalstar.com.

On Twitter @LJSDon.


Political reporter

Don Walton, a Husker and Yankee fan, is a longtime Journal Star political and government reporter.

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