Nebraska lawmakers grumble at likelihood of puny tax cut

LINCOLN, Neb. (AP) — Farmers, ranchers and homeowners throughout Nebraska are likely to get more state money next year to offset their property tax bills, but it won't make a big difference for many people and that's leaving some lawmakers exasperated as this year's legislative session nears its end.

The new state budget awaiting a final vote in the Legislature provides a major boost to the Nebraska property tax credit, which helps reduce the total tax bill sent to property owners.

For many property owners, the tax savings will be relatively small or even non-existent, given rising property values and local governments eager to make use of the tax dollars while holding their levies flat. An unknown amount of the tax credit would go to out-of-state landowners.

"It doesn't even keep pace with inflation," said Omaha Sen. Lou Ann Linehan, chairwoman of the Revenue Committee. "It's better than getting nothing, but it's not enough."

If the budget passes as expected, owners of a $150,000 home would get a $106 discount on their property tax bill — about $29 more than what they currently receive.

At the same time, the credit has been consuming an ever-larger chunk of the state budget, drawing criticism from progressive lawmakers who want more money for education, health care, child welfare services and other priorities.

The spending plan calls for a $51 million annual boost to the tax credit, for a total of $275 million a year — roughly 5 percent of the state's annual general-fund budget and nearly double the amount distributed to taxpayers in 2015.

"The idea that we are not prioritizing property tax relief is completely false," said Sen. Adam Morfeld, of Lincoln. "What some people fail to acknowledge is there are other priorities in this state."

Morfeld said lawmakers are "barely able to cover the priorities we already have," including long-term care services for the elderly, K-12 public schools and the state universities and colleges. Morfeld, who represents a large number of University of Nebraska-Lincoln students, said he rarely hears constituent complaints about high taxes.

"We could defund everything else in the state and probably still not make everybody happy when it comes to property tax relief, and we'd still be having this debate" he said. "It's a race to the bottom."

Lawmakers will try again this week to approve a larger property tax package, but they may have to scale it back to win enough support, Linehan said. It's unclear whether lawmakers can reach a compromise before the session ends on May 31, frustrating many rural senators.

"This is my third session as a state senator and we have adjourned every single year without addressing the property tax crisis," Sen. Tom Brewer, of Gordon, wrote Friday in his weekly newsletter to constituents. "This has been going on for decades and it makes me sick."

One major package championed by Linehan and others was criticized by Gov. Pete Ricketts, a fellow Republican. The proposal sought to lower property taxes by increasing a variety of sales taxes and the state cigarette tax while boosting state aid to K-12 public schools.

The latest plan touted by some senators doesn't touch the sales tax rate, the cigarette tax or K-12 school funding but would eliminate sales tax exemptions on dozens of goods and services, including pop, candy, bottled water, haircuts, tattoos, lawn care and dating services.

Ricketts criticized that plan as a "tax swap" and urged lawmakers to reject it.

"Senators continue to pursue the failed policy of raising taxes on working families and pitting Nebraskans against each other," he said.

___

Follow Grant Schulte on Twitter at https://twitter.com/GrantSchulte