The Legislature's Revenue Committee on Friday continued its search for a tax reform plan that would deliver property tax relief with some new ideas laid on the table.

Meanwhile, Creighton University economist Ernie Goss told the committee that "Nebraska is a high tax state (with) a spending problem," arguing that the state overspends both on K-12 education and higher education, based on the median level of regional states.

The committee is focused on trying to build a plan that could provide property tax relief funded with revenue raised by elimination of some sales tax exemptions rather than seeking an increase in the state sales tax rate as it did during the 2018 legislative session.

But other ideas were added to a list of potential options during Friday's committee discussion, including elimination of some current property tax exemptions, a local sales tax option to help fund public schools and privatization of some public services.

The committee met with both Goss and Eric Thompson, University of Nebraska-Lincoln economist and director of UNL's Bureau of Business Research.

Goss said Nebraska ranks first among neighboring states in the size of its income and corporate taxes, second in property taxes and fifth in sales taxes.

"And Nebraska is moving in the wrong direction," he said. 

"Local spending has been growing at an unsustainable pace," he told the committee.

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To be more competitive, Goss said, the state could rely more heavily on sales tax revenue by reducing its sales tax exemptions, as the committee is considering.

"Nebraska is a high tax state and moving higher," he said.

"Something needs to be done so Nebraska remains competitive."

"I don't envy the position you're in," Goss told the committee. "It's a huge dilemma."

Thompson also pointed to the option of eliminating some sales tax exemptions, but he noted that the exemptions that could raise the most revenue may be those most difficult to end.

The top five are food, prescription medicine, gasoline, health care services and education services.

Other tax reform options include expanding opportunities to raise revenue at the local level, he said.

Revenue Committee Chairwoman Lou Ann Linehan of Elkhorn has set a goal of reaching a tax reform agreement by Dec. 15 that can win unanimous support from the committee, which also is attempting to find common ground with Gov. Pete Ricketts.

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

On Twitter @LJSDon.


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