Property tax, school funding debate begins Wednesday

That tax debate relatively early in the 60-day legislative session fulfills a goal shared by Revenue Committee Chairwoman Lou Ann Linehan of Elkhorn and Speaker Jim Scheer of Norfolk, who sets the legislative agenda.

But Scheer on Tuesday was denied the authority to determine the order of amendments that will be considered to the bill (LB974) when the Legislature's Executive Board fell short of the two-thirds majority required to allow the Speaker to shape the debate.

Voting no on a 5-4 count were Sens. Ernie Chambers, Tony Vargas and John McCollister, all of Omaha, and Sen. Kate Bolz of Lincoln.

McCollister is one of two members of the Revenue Committee who opposed advancement of the committee's tax proposal. Sen. Sue Crawford of Bellevue also voted no. 

Linehan has described the new proposal as a plan to reduce local property taxes through a phased reduction in tax valuation while increasing state aid to schools.

"It provides tax relief without hurting our schools," she said Tuesday during an interview in her Capitol office.

Nebraska levies the highest property taxes in the nation, she said.

"Just because you own property doesn't mean you're rich," Linehan said. "It's a very regressive tax."

Looking ahead, Linehan said she believes the amended tax bill will gain the 25 votes needed to win first-stage floor approval — "we're within striking distance," she said — and then the bargaining will begin.

The support of at least 33 of the Legislature's 49 state senators eventually would be needed to break a filibuster mounted by the plan's opponents.

Early indications suggest that metropolitan Omaha and Lincoln senators are likely to band together to oppose the bill in its current form.

As the Legislature prepares to tackle the tax reform issue, a bill (LB720) to enact a new business tax incentives package waits at second-stage floor consideration where its fate may be tied to the tax reform measure.

The Revenue Committee is poised to send a series of amendments to the floor that would rewrite the business proposal in an effort to attract additional support from rural senators who blocked the bill during the 2019 legislative session when property tax reform fell victim to a filibuster.

Unlike earlier bills, the new tax proposal would not raise income or sales tax rates or eliminate any sales tax exemptions. The current state property tax credit relief fund would remain intact.

Gov. Pete Ricketts has endorsed "the general framework" of the committee's tax package while arguing specifically for a provision that would limit growth in funding for public schools to the rate of inflation.