No one said it was going to be easy.

The Legislature's Revenue Committee struggled Monday to reach consensus on a tax reform plan directed at substantial property tax relief, meeting three times to engage in executive session discussions before deciding to resume deliberations Tuesday.

In action throughout the day, the committee fashioned a tentative proposal to hike the 5.5% state sales tax rate by one-half of a percent and remove sales tax exemptions on a variety of goods and services in order to raise funding directly targeted for local property tax relief.

An earlier tentative committee proposal had centered on a three-quarter-cent bump in the sales tax rate.

Discussion within the committee pointed to some differences over whether to protect the state's current property tax credit fund or build a new tax reform package centered on state aid to schools and reduction of the local school property tax load.

At one point, there was some tension among committee members about agricultural and urban property tax concerns.

But when Chairwoman Lou Ann Linehan of Elkhorn informally asked committee members who knew they would not be able to support the evolving tax package (LB289) to raise their hands, no senator did. 

What appeared to be developing is a future clash on the floor of the Legislature between spending recommendations that will be forthcoming from the Appropriations Committee and the tax reduction proposal emerging from the Revenue Committee.

Isn't this setting up a fight with the Appropriations Committee? Linehan was asked after her committee adjourned early Monday evening.

"Yep," Linehan said. "We will talk about cutting taxes or spending money," she said.

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The reform package being shaped by the Revenue Committee is designed to provide a minimum 20% reduction in school taxes. 

During Monday's trio of meetings, the committee decided to focus on raising the revenue to fund the reduction in property taxes by wiping out a series of current state sales tax exemptions rather than relying on its previous decision to hike the sales tax rate by three-quarters of a cent.

A list of 26 products or services that would lose their sales tax exemptions ranged from motor vehicle repair to pet-related services.  

An earlier tentative decision to tax candy, pop and bottled water was formalized. That change would raise an estimated $30 million in new revenue.

A cigarette tax hike from 64 cents to $1 a pack would produce $27 million in additional revenue.

All told, Monday's committee decisions would produce $372.7 million in new revenue, including $171.5 million from the half-cent sales tax increase.

That would be on top of the $224 million in the state's property tax credit fund. The impact of LB289 in fiscal 2019-20 was pegged at $482.4 million. 

Linehan said she hopes to gain committee approval for its amended bill Tuesday with a focus on sending the revenue package to the floor for debate in advance of the Appropriations Committee's 2019-21 budget recommendations.

One Revenue Committee member suggested that the committee's focus should be to move a bill to the floor and then begin the negotiations that will be required to attempt to reach the goal of acquiring the 33 votes that will be needed to clear a filibuster waged by its opponents.

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Reach the writer at 402-473-7248 or dwalton@journalstar.com.

On Twitter @LJSDon.


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