A year that began with much justified sound and fury about Nebraska’s need to reform its tax structure will end without a single meaningful reform in that arena.
The final nail in the coffin came Friday, when the organizers of a petition drive that promised $1.1 billion in property tax relief abruptly halted their efforts. With it died the last vestiges of the three tax-reform bills that entered this year’s short legislative session.
Now, it’s time to regroup. Reconfiguring Nebraska’s tax structure is perhaps the single-most pressing problem statewide.
But, rather than rushing through to pass something, last week’s unexpected development provides time to craft a thoughtful solution and enact sensible tax reform in a way that will reduce the disproportionate burden shouldered by farmers and ranchers without bankrupting the state.
To be clear, simply reducing taxes is not necessarily a good thing. Cutting taxes without replacing the lost revenue means either a dramatic reduction in the services Nebraskans expect of state government – or a resultant increase in other taxes to cover. In our eyes, the inability to identify replacement revenue was the fatal flaw of the petition drive's endgame.
In essence, such a system is partly to blame for today’s discrepancy, with decreasing state aid to K-12 education fueling unsustainable increases in local property taxes.
Accordingly, any tax plan must be revenue neutral and not rely solely on the allure of potential gains – which, by definition, may not materialize – in increased investment to fund itself.
That work will likely produce more enemies than friends, as every option needs to be on the table. Limiting what is fair game for reform only limits how much can be achieved.
Further complicating meaningful reform are the disparate groups and ideas that must coalesce around any proposal. To be successful, any tax plan must bridge the urban-rural divide, shepherd in a camp that feels a penny of new revenue generated is anathema, improve Nebraska’s insufficient school aid formula and ensure Nebraska’s general and rainy day funds remain sound.
Nothing will make everyone universally happy. But a hard-fought give-and-take can yield enough of a compromise to leave them all satisfied enough with the outcome – which is better than the inaction that’s plagued Nebraska in this pursuit for years.
By no means will this process be easy. But Nebraskans elected leaders to solve the tough problems – and one continues to stare them in the face. Even as this $1.1 billion albatross no longer hangs around the state’s neck, the need for a fix remains.
Though 2018 is guaranteed to end without any improvements to Nebraska’s outdated tax structure, 2019 mustn’t end with the same resignation.
Ample time now exists to come up with a suitable solution. The political will must be there to match it.