On Day 6 of the Legislature's 90-day session, its tax reform battle lines began to take shape.
A comprehensive tax reform package that would hike the state sales tax rate by one-half cent while eliminating a host of sales tax exemptions and several tax credits was introduced in the Legislature on Wednesday as a vehicle for providing more than $500 million in property tax relief.
Also included in the bill is new sales tax revenue collected from online retail sales.
The bill (LB314), sponsored by Sen. Tom Briese of Albion, was structured to provide "sustainable funding of high-quality K-12 education," according to an accompanying summary, and it has the support of the Nebraska State Education Association, along with a host of agricultural organizations, including the Nebraska Farm Bureau.
"Nebraska deserves a fair and balanced tax structure," Briese said, "and the responsible route to property tax relief is to generate new revenue that would provide immediate relief."
The state's tax system "currently is not fair and not balanced," he said.
The proposal represents a restructured version of a bill introduced by Briese last year and it may emerge as the major alternative to tax proposals championed by Gov. Pete Ricketts.
Tuesday, the governor urged the Legislature to propose 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.
Ricketts said he's determined to rule out any legislative tax reform initiatives that would raise some taxes in order to target tax relief.
Last year, the original Briese tax reform proposal was unable to break loose from the Revenue Committee although it did become the subject of floor debate.
This year, Briese is a member of the committee that sports five new faces and a new chairperson, Sen. Lou Ann Linehan of Elkhorn, who will sponsor the governor's constitutional amendment proposal.
Briese's bill would raise the state sales tax rate from 5.5 percent to 6 percent, increase the state cigarette tax by $1.50 a pack and increase excise taxes on beer, wine and alcohol while eliminating sales tax exemptions on candy, soft drinks and bottled water, along with 19 other exempted purchases.
Other provisions eliminate some state income tax exclusions and would impose a 7.84 percent income tax surcharge on income above $250,000 for individuals.
The Briese proposal is designed to provide immediate and substantial property tax relief and represents a $782.6 million package that assumes full funding of the state's school-aid formula.
"To reduce our reliance on property taxes and also maintain vital investments in K-12 education, other revenue sources must be found," a summary of the bill's provisions stated.