The 2018 Legislature left town with the wreckage of competing tax reform proposals scattered behind.

When state senators reconvene next January, with perhaps a dozen newbies in their ranks, they may face the same recurring property tax challenge that has been stirring growing unrest, particularly in rural Nebraska.

Or they may confront a potential tax and revenue crisis that has been dropped into their laps.

And that could look less like a hot potato and more like a bomb.

Voters will make that call in November if a statewide petition campaign is successful in attaching a proposed initiative to the ballot that would implement $1.1 billion in local property tax relief. 

The trade-off for that is a billion-dollar reduction in state income tax support to fund state programs and services; that's the money that would be returned to taxpayers in the form of income tax credits equal to 50 percent of local school property taxes paid.

The next Legislature would walk into an explosive environment, facing difficult choices and pressure from all sides.

Do you increase other state revenue sources to fill in that million-dollar gap or do you reduce state government spending, or both?

The state sales tax rate, and/or sales tax exemptions, always pop up first as the most politically vulnerable revenue base when senators are looking for a source of additional revenue.

But the state income tax offers another rich revenue source.

And a litany of tax exemptions and tax credits could also be up for grabs. 

By happenstance, the Nebraska Advantage Act — the key element in efforts to attract business expansion in the state through an array of tax incentives — will be on the 2019 legislative agenda, because the law is scheduled to sunset at the end of 2020.

Factor into all of that the fact the state budget already is under duress as a result of an anemic revenue stream. 

What's potentially building is the most critical tax showdown in the Legislature in half a century.

In 1967, the incoming Legislature confronted the startling reality that state government suddenly had no visible means of support after voters delivered a twin blow two months before senators convened.

In the 1966 general election, voters adopted a constitutional amendment that eliminated the state property tax, which had been state government's fundamental revenue source, and overwhelmingly rejected a state income tax law that never took effect. 

Following the leadership of newly elected Gov. Norbert Tiemann, state senators enacted a state income tax and a state sales tax to fund state government programs and services, not only broadening the tax base but also supplying the state with a richer revenue stream.

The general consensus now is that sponsors of the petition drive will be successful in placing the property tax initiative on this November's ballot.

But there is more divided opinion over the question of whether the initiative would be approved by Nebraska voters. 

With the issue likely, probably even destined, to sharply divide Nebraskans and broad economic interests, largely because of its potential impact on other taxes, opinion is divided on whether it's likely to be approved.

Some opponents of the effort already are warning that it will negatively divide agriculture and other business interests, rural and urban voters, the two big cities and farm and ranch country, especially when extensive media advertising campaigns begin to define the decision in stark terms.

In farewell remarks to the Legislature on Wednesday, outgoing Sen. Paul Schumacher of Columbus noted senators, both past and current, have closed off their policy and funding options by reducing potential state revenue by "three-quarters of a billion dollars a year" through an ongoing series of tax cuts over the last decade or so.

Next year's legislative tax decisions will be guided by a new cast of characters.

Sen. Jim Smith of Papillion, chairman of the Revenue Committee, will be gone, along with a majority of the members of the tax-writing committee.

That includes Sens. Schumacher, Burke Harr of Omaha, Lydia Brasch of Bancroft and Tyson Larson of O'Neill.

Early speculation about who might chair the committee in 2019, a decision that will be made by the full Legislature next January, centers on Sen. Brett Lindstrom of Omaha and Sen. Curt Friesen of Henderson, along with Sen. Lou Ann Linehan of Elkhorn.  

Lindstrom and Friesen are members of the committee.

Whether the initiative is successful or not, pressure will be on the next Legislature to tackle Nebraska's property tax issue.

But Speaker Jim Scheer of Norfolk has warned that the initiative represents a high-stakes gamble for agriculture.

The risk is that "no one will ever care any more" about fundamentally resolving the issue in the Legislature if voters reject substantial property tax relief, Scheer said during the closing days of this session as senators made a last-ditch, but clearly doomed, attempt to reach agreement on tax reform. 

Republican Gov. Pete Ricketts actively opposes the property tax initiative, but has pledged to continue to make property tax relief a legislative priority if he's re-elected in November.

Ricketts said he could not support the initiative "because of the destruction it would cause," not only in terms of risking funding for vital state programs and services, but also in threatening to trigger "massive tax increases."

The governor joined Smith this year in attempting to gain legislative enactment of a bill that would have phased in property tax relief over a decade while also reducing the corporate income tax rate.

If re-elected, he's promised to try again.

Sen. Bob Krist of Omaha, the best-known Democratic gubernatorial candidate, also opposes the initiative.

"There are inequities in the current proposal, such as for seniors on fixed incomes, and it does not address the revenue shortfall for education it would create," he said. But, Krist said, he would support another form of property tax relief.

Smith also opposes the initiative.

"I'm not convinced that when people truly understand what that means for Nebraska that they are going to see that as the right solution for property tax relief," he said. 

If its enactment would trigger a sales tax increase, that "can have a negative effect on economic activity, along with an obvious effect on families" who would be paying more for their daily purchases, Smith said. 

Sen. Steve Erdman of Bayard has been an outspoken advocate for the initiative, arguing that the Legislature and the governor have had their chance and they never will provide substantial property tax relief.   

It was Erdman who pounded the last nail into the Ricketts-Smith proposal by triggering a procedural vote that suggested the bill was eight votes short of the support required to overcome a filibuster.  

"The governor's plan didn't mean anything anytime soon to anybody," Erdman said as the legislative session concluded.