A stalled legislative package of income and property tax reductions is being restructured to provide more property tax relief, Sen. Jim Smith acknowledged Wednesday, and although encouraged, he sees "a very, very narrow path" ahead for its eventual enactment.
Nevertheless, the Legislature's Revenue Committee chairman said he feels more confident at this early stage of the tax bill's consideration than he did at the same time in the process last year.
Details of the proposal will be revealed in the State of the State address delivered to the Legislature by Gov. Pete Ricketts on Jan. 10, the Papillion senator said.
Indications are that the revised plan is being test-marketed among some senators in advance of next week.
"And we have to talk to stakeholders before we go prime-time," Smith said.
"There's never a guarantee of its success," he said. "There are too many moving parts.
"But we've listened and we're engaged on areas that senators want to see addressed."
The pending tax package (LB461) is weighted more toward personal and corporate income tax reduction than property tax relief. It was trapped at the first stage of floor consideration by a filibuster last May.
Supporters fell six votes short of the number of senators required to invoke cloture and end debate on the proposal. That motion failed on a 27-9 vote.
Largely rural supporters of major property tax reduction are planning to introduce their own bill during the current legislative session while mounting a petition drive that would place an initiative on the ballot in November if the Legislature does not act.
That plan would provide an estimated $1.1 billion in annual property tax relief by effectively reducing the local school property tax load by up to 50 percent. Taxpayers could access that tax relief through state income tax refunds or credits.
Ricketts has sounded alarm bells about the cost of that proposal, suggesting it could lead to "massive tax increases" applied to sales and/or income.
While centering on income tax cuts, the pending tax package would provide for reductions in the valuation of ag land for local property tax purposes.
"We need to have more balance in terms of property tax relief," Smith said. "We've heard that loud and clear, we understand it needs to be major (and) that's a challenge."
The bill's components "need to be adjusted to strike the right balance," he said.
Smith noted that "funding sources are limited" at a time when state government is reducing its spending growth, revenue projections and collections are lagging, and the state budget cash reserve is declining.
"We need to be realistic," he said. "The state is really limited."
The best way to achieve funding is through economic growth, he said.
"My reluctance to talk about details now is being respectful of my colleagues" as they grapple with the issue in advance of its unveiling, Smith said.