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"It's not over," Sen. Lou Ann Linehan of Elkhorn said Tuesday.

That was the Revenue Committee chairwoman's upbeat assessment after three hours of spirited debate over the committee's comprehensive tax reform bill exposed an anticipated metro-rural divide over the property tax reduction proposal.

Linehan now faces the daunting challenge of convincing Speaker Jim Scheer of Norfolk that she can marshal the 33 votes that would be required to overcome an anticipated filibuster. That's what's needed for Scheer to agree to return the proposal (LB289) to the legislative agenda.

"I think we have more than 25," Linehan said, and she's prepared to engage in negotiations now to reach for 33. 

"We may have to increase the proposed income tax credit" to meet concerns expressed by a number of urban senators, she said.   

The debate, she said, went "better than expected," with only two senators flatly declaring their opposition to the proposal. Others who raised concerns or said they could not vote for the bill in its current form may be open to amendments that meet their objections, Linehan suggested.

"I feel good about the discussion. It was the Legislature working, listening, asking questions. Now, we have a lot of work to do."

Linehan's optimistic appraisal followed a Tuesday afternoon debate that exposed a fundamental split between rural Nebraska and the Omaha-Lincoln metropolitan complex.

Sen. Adam Morfeld of Lincoln said the proposal's new state aid formula would create a $16 million shortfall in funding for Lincoln Public Schools.

The bill is "picking and choosing winners and losers," he said, and "districts that are rapidly growing should not be punished" in the process.

Sen. Kate Bolz of Lincoln also raised concerns about the impact on LPS. 

The comprehensive package constructed by the Revenue Committee after three months of negotiation would increase the state sales tax rate by one-half-cent, hike the state cigarette tax and eliminate two dozen sales tax exemptions, while dedicating all of that increased revenue to property tax reductions delivered through increased state aid to schools.

Gov. Pete Ricketts has mounted an all-out assault on the proposal, describing it as a tax and spending increase. 

Some of the governor's staunchest supporters in the Legislature held their fire during Tuesday's debate, apparently saving that ammunition in anticipation that the bill isn't going anywhere.

Sen. Ernie Chambers of Omaha served notice that he will attempt to scuttle the proposal, describing its sales tax increases as "cruel, heartless, unfeeling" assaults on the poor. If the proposal survives and returns to the floor, he promised "a slugfest."

Sen. Curt Friesen of Henderson, one of two Revenue Committee members who withheld their votes when the committee advanced the measure on a 6-0 vote, said he now supports the bill.

"This does give us a path forward," he said.  "It's a good start toward property tax relief."

Sen. John McCollister of Omaha, the other committee member who withheld his vote, said he opposes the measure in its present form but is open to change.

Under provisions of the proposal, Linehan said, every school district would receive at least a third of its funding from the state and the measure would reduce the valuation of all property for tax purposes.  

The bill would raise $372 million in new revenue and reduce property taxes by an average of 9% while making a fundamental change in how the state funds education, Friesen said.

"It really is decision time," Sen. Tom Briese of Albion said. "Either you stand for property tax relief or you stand in the way."

"Doing nothing is not an option," Sen. Dan Hughes of Venango said.

Sen. Mike Groene of North Platte said the proposal "creates fairness in our tax policy (and) it's time to step forward and be a state senator."

"If this was easy," Linehan suggested, "it already would be done."

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

On Twitter @LJSDon.

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Political reporter

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

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