The tax reform package championed by Gov. Pete Ricketts and Sen. Jim Smith of Papillion appeared trapped Tuesday by a filibuster and faded from this year's legislative agenda.
Following extended debate and a test vote that showed 25 senators opposed to a motion to shelve the measure, Speaker Jim Scheer of Norfolk said supporters will need to convince him that they can produce the 33 votes required to end a filibuster before he would consider rescheduling the bill for debate.
While the motion to bracket the bill (LB947) failed on a 25-9 vote, the winning side was far short of the votes required to eventually move the proposal forward by clearing the filibuster barrier.
The bill, which would implement property tax relief over a decade, reduce the corporate tax rate over a five-year period and fund workforce development initiatives, was shadowed during Tuesday's debate by an alternative plan for property tax relief that will appear later this week in the form of a proposed amendment to pending legislation.
That measure (LB1084), introduced by Sen. Tom Briese of Albion, would provide substantial property tax reduction immediately, with funding provided by a one-half-cent increase in the state sales tax rate and other revenue-producing measures, including a hike in the state cigarette tax.
Smith argued his plan, the only one recommended by the Revenue Committee that he chairs, provided the only real opportunity for tax relief this year.
Sen. Steve Erdman of Bayard led opposition to the bill, describing it as "a joke (and) an illusion," a proposal that would take a decade to fully implement.
"This is too little and too late," Erdman argued.
"This governor never has been and never will be for property tax relief," he said.
Reacting to the day's events, Ricketts said "it is unacceptable for senators to fail to deliver property tax relief for the second year in a row.
"It's time for everyone to come to the table to work together on real tax relief that doesn't rely on tax increases," the governor said.
Hanging over the debate was the statewide petition drive that is underway to place a billion-dollar property tax reduction initiative on the November general election ballot.
The initiative would provide state income tax refunds or credits equal to 50 percent of local school property taxes paid. The proposal does not provide for any replacement of income tax revenue used to fund state programs and services.
"This body never has and never will make the tough decision unless forced to," Erdman said.
"Sign the petition," he said in directing his remarks to Nebraskans.
Smith said the ballot initiative would leave "a $1.1 billion hole in our budget," and the result would be reduced state services and education funding.
"Kansas is nothing compared to what the ballot initiative will do to Nebraska," Smith said, referring to the reduction in state education funding and support for other state services resulting from policies implemented by former Kansas Gov. Sam Brownback.
The first-year cost of the proposed Ricketts-Smith tax plan was pegged at $39 million, with funding coming from the state's cash reserve plan.
"We need to rebuild the cash reserve, not reduce it," Sen. Kate Bolz of Lincoln said.
"This bill is reckless and irresponsible," Sen. Lynne Walz of Fremont argued, and could lead to "more cuts to education."
Sen. John McCollister of Omaha said the proposal was akin to "driving on a treacherous mountain road without any guard rail."
The Ricketts-Smith proposal had the backing of agriculture and business interests and was the product of months of negotiation.
Over the period of a decade, property tax reduction credits would grow to 20 percent and the plan would provide $600 million in property tax relief over time, Smith said.
"We need to step up and say this is how we are going to pay for it," Briese said in arguing for his alternative proposal. The choice is immediate and substantial property tax relief, or unfunded relief deferred "years down the road," he said.
Smith said Briese's plan would be "a job-killer" with its increase in the sales tax rate, proposed reductions in sales tax exemptions and other tax provisions.
The plan will be offered as an amendment to another bill (LB1103) later this week, triggering renewed debate over tax reform in the fading days of the legislative session.