Deadlock in the Legislature.
A last-ditch effort to provide substantial property tax relief stalled on Wednesday, triggering a long-threatened refusal to enact a new state business development tax incentives program to succeed the plan that will expire at the end of the year.
After debate on the much-amended tax bill concluded with insufficient support available to overcome an anticipated filibuster by its opponents, the bill's proponents trapped the business incentives package in a similar position following extensive debate.
Neither measure was subjected to a vote.
In the wake of the deadlock, Speaker Jim Scheer of Norfolk said he will wait to see if proponents of the two major proposals are able to negotiate some sort of compromise agreement to unlock the logjam before considering whether to attempt to step in himself.
"I'll give them a chance to see where this leads," Scheer said during an interview after action on the two major proposals came to a halt.
"It certainly behooves the body to put something together," he said.
"But I'm a realist," Scheer said, recognizing that may not occur.
Time will be a factor since the coronavirus-interrupted legislative session has only 14 working days remaining and is scheduled to adjourn on Aug. 13, and there is no obvious pathway to a negotiated compromise.
Wednesday's lengthy debate on both issues demonstrated a predominantly rural-urban fissure on property tax reform that is tied to changes in state aid to public schools.
Rural senators had signaled earlier this session that they were prepared to take the business tax incentives proposal hostage if senators did not agree on a substantial property tax reduction plan.
The property tax proposal, which came in the form of an amended LB1106 after the Revenue Committee's original proposal, LB974, had been blocked on the floor, would reduce local property tax valuations and increase state aid to schools.
The result would provide $520 million in additional state aid distributed over three years.
The tax valuation of agricultural land would be decreased from 75% to 55% of actual value, while the valuation of residential and commercial property would drop from 100% to 87% over three years.
The bill would impose a 2% lid on annual spending growth by individual school districts.
"We have a crisis in Nebraska because of our K-12 education's over-reliance on property taxes," Revenue Chairwoman Lou Ann Linehan of Elkhorn said.
Sen. Tom Briese of Albion said Nebraska is in the midst of "a property tax crisis" with taxes having reached an unreasonable and unsustainable level.
Sen. John McCollister of Omaha said the proposal would be "a step backward" and it is opposed by every school organization in the state.
Sen. Kate Bolz of Lincoln said she wants to be sure that schools with high needs are able to "get the resources they need to succeed."
Sen. John Stinner of Gering, chairman of the Appropriations Committee, took exception to news media suggestions that the Legislature has not sufficiently prioritized property tax relief.
The state currently provides $275 million in property tax relief, and that is the fourth largest item in the state budget, he said.
"Even in tough times we prioritized property tax relief," Stinner said.
Briese, a leader in tying the fate of property tax relief and business tax incentives together as "a package deal," said $275 million is 6% of property taxes levied "and that's not a lot to brag about."
Sen. Adam Morfeld of Lincoln suggested that "we don't have the revenue to do this in a fiscally responsible or sensible way," although there may be options for additional revenue available if Nebraskans decide to legalize medical marijuana or casino gaming when they vote on ballot issues in November.
In debate on adoption of a new business development tax incentives proposal, Sen. Mark Kolterman of Seward, sponsor of LB720, said "it is critical to send this message to decision-makers" as the current Nebraska Advantage plan comes to a halt at the end of the year.
"We need to figure out a compromise where everybody gets something," Linehan said.
Briese questioned whether the tax incentive package is "a good investment for our taxpayers" and whether business development investments would have occurred without an incentive program.
Stinner said business tax incentives are "about revenue growth."
"I have voted for every property tax reduction," he said. "We should have both."
Included in the business incentive package is support for a proposed $2.6 billion mega-project that would locate a new federal disaster response facility at the University of Nebraska Medical Center in Omaha.
That proposal would require a $300 million state funding commitment that would be matched by $300 million in private-sector donations.
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