Sales and cigarette taxes would increase, and more items would be subject to taxes, in order to lower property taxes under a new plan introduced in the Legislature Wednesday. Meanwhile, supporters and opponents of wind power compromised on a proposal dealing with the use of eminent domain.
Revenue Committee Chair Sen. Lou Ann Linehan announced the latest plan to lower property taxes in a Capitol rotunda news conference. She pitched the plan as an alternative to a petition, currently being circulated, that would force the state to refund 35 percent of everyone’s property taxes without saying where that money should come from. “We can set here and stare at the problem. Or we, and my commit – the Revenue Committee, we could actually try to fix the problem before we have a crisis presented to us because we’re not listening to our constituents,” she said.
The plan outlined by Linehan would increase the state sales tax by three-quarters of a cent and cigarette taxes by 36 cents a pack. It would end sales tax exemptions on pop, candy, and bottled water, and would tax moving, storage, plumbing, heating, ventilation and air conditioning services, along with veterinary care for pets, but not livestock.
Much of the increased revenue would be funneled into a half-billion dollar increase in state aid to schools, the largest single user of local property tax dollars. Linehan said on average, school property taxes would go down 20 percent, although that would vary by district. Since schools use about 60 percent of all property tax dollars, that could mean an average 12 percent property tax cut overall.
In a press release late Wednesday afternoon, Gov. Pete Ricketts slammed the proposal as the “largest tax increase in Nebraska history.”
“It’s a transfer of half a billion dollars from family budgets for government spending,” Ricketts said. “I am alarmed that senators are even considering this, and I urge the Revenue Committee and the full Legislature to reject these tax increases.”
Before the governor released his statement Linehan, a registered Republican in the officially nonpartisan Legislature, stressed that her differences with the Republican governor are not personal. She talked about returning to Nebraska after working in Washington, DC and living in Virginia.
“I ran for the Legislature because when I moved back here … I was shocked at the taxes in Nebraska. They are too high. I have people living in my district, retired people, who are paying more per month in property taxes than they paid in their mortgage payment. They’re forced to move. It’s not okay,” she said.
Much of the pressure for property tax relief has come from farmers hit hard by high land values and low commodity prices. Steve Nelson of the Nebraska Farm Bureau said the plan unveiled Wednesday contains a lot of good steps, although committee member Sen. Tom Briese, said he’s concerned it doesn’t raise enough new tax revenue, and committee member Sen. Sue Crawford worried whether there would be enough money for cities, counties, and special education programs.
There’s expected to be a public hearing on the proposal next Wednesday afternoon, and it could still change. Ultimately, any plan that emerges will have to win support from two-thirds of the Legislature to overcome a likely filibuster.
Linehan sounded optimistic. “We have a goal here, pretty well sketched out, that reduces everybody in the state’s property taxes. I don’t know how many senators want to go home and say they didn’t vote for that – and increases school aid a lot, by half a billion dollars. So I don’t know who wants to tell their schools they were against more state funding, and I don’t know who wants to tell their property taxpayers they were against property tax relief,” she said.
Also Wednesday, senators adopted a compromise on using eminent domain for transmission lines to privately-owned wind farms.
Sen. Tom Brewer originally proposed denying eminent domain – a process whereby a landowner can be forced, with compensation, to allow such a line to pass over his property. But after his bill stalled, Brewer worked with wind power supporters on a compromise.
That compromise says such projects are presumed to be for a public use, and can use eminent domain. But it still gives the landowner the right to go to court to argue against that.
Sen. Wendy DeBoer, who worked on the compromise with Brewer, said that was better than a blanket prohibition by the Legislature. “The judicial branch is much better situated to look at these individual circumstances than we are. I don’t think we in this body should say ‘always,’ or ‘never,’ about something like eminent domain,” she said.
Brewer supported the compromise as well. “Regardless of how you feel about wind energy, I would like to think that all of us would, at the very least, want to have our day in court before a private company has or can take our land. The people get to have this status under the compromise,” he said.
Brewer said a court could decide a transmission line was for a public use if Nebraska needed the power, but not if it was simply going to be sold to a regional power pool.
David Levy, a lobbyist and attorney for wind developers, disputed that. Levy compared a transmission line to a road that could be used to travel from a private home to a private employer, but still serves a public purpose.
Senators adopted the compromise amendment on a vote of 37-1 before giving the bill first-round approval.