The Legislature's Revenue Committee on Thursday took a deep dive into the politically volatile issue of major tax reform at a marathon hearing centered on competing proposals for immediate and substantial property tax relief.
What will follow will be weeks, and perhaps months, of committee dialogue that attempts to forge consensus on a package that can command the 33 votes required to overcome a filibuster by its legislative opponents.
Beyond that lies the challenge of a probable gubernatorial veto of any proposal that would raise taxes to fund immediate property tax relief. It would require the votes of at least 30 of the 49 state senators to override a veto.
Gov. Pete Ricketts has proposed a vote of the people on a constitutional amendment that would establish a 3 percent cap on the growth rate of local property taxes while recommending a more immediate $51 million hike in direct property tax reduction provided through the state's property tax credit relief fund.
Attention centered Thursday on LB314, a comprehensive proposal authored by Sen. Tom Briese of Albion that would fund an estimated $650 million in property tax relief by the 2020-21 fiscal year.
Briese's bill proposes a one-half percent hike in the state sales tax rate, establishes an income surtax on high-income Nebraskans, increases taxes on cigarettes and alcoholic beverages, and repeals a number of sales tax exemptions.
"We have to talk about new revenue to offset property taxes," Briese told fellow members of the committee.
"It's time for everyone, including lobbyists and politicians, to decide whether they want to be part of the solution or stand in the way," he said.
The bill attracted more than six hours of testimony, most of which came from opponents.
Spokespersons for agriculture and education supported the proposal, and a parade of business interests, including a large number of local craft brewers, lined up in opposition to the measure.
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"It provides a more fair and balanced tax system and it provides funding for K-12 schools," said John Hansen, president of the Nebraska Farmers Union.
"Raising taxes would have a detrimental economic effect," countered Bryan Slone, president of the Nebraska Chamber of Commerce.
Other major proposals were offered by Sen. Curt Friesen of Henderson and Sen. Mike Groene of North Platte.
Friesen's bill (LB497) would generate an estimated $518 million in additional annual state revenue by fiscal 2020-21 for allocation to local schools in an effort to lower local property taxes. The proposal is designed to ensure that every public school in Nebraska would receive state support equal to 50 percent of basic education funding needs.
The measure would phase in reductions in the value of agricultural land for school tax purposes over three years while repealing a number of state sales tax exemptions, increasing taxes on cigarettes and alcohol, and repealing the state's personal property tax exemption.
"The bill fixes inequity in school funding," Friesen said, along with the current "over-reliance on property taxes to fund education."
Friesen's proposal would also provide $150 million of new revenue to be allocated to the state's beleaguered cash reserve fund.
Groene's bill (LB677) would provide property tax relief by reducing the maximum property tax levy for school districts.
The corresponding increase in state funding triggered by the current state aid formula was estimated to be $91 million in fiscal 2020-21, according to a legislative fiscal analysis.