The quest – “a long or arduous search for something that is difficult to find, or an attempt to achieve something difficult” – continues for the Nebraska Legislature’s Revenue Committee.
Simply defined, the committee is looking for state revenue to fund local property tax relief after efforts to do the same failed last session. Committee meetings, including a luncheon with Gov. Pete Ricketts have continued since, with chair Sen. Lou Ann Linehan of Elkhorn looking at a December 15 deadline.
After one such recent meeting, Linehan suggested the committee might want to revisit a 2011 legislative decision to dedicate a quarter-cent of the state's sales tax rate to road construction. She said she simply wants the committee to look at it as a number of options, no-holds-barred, are laid on the table. Senators have already broadened a list of sales tax exemptions that they may recommend eliminating in order to find money for property tax reduction.
At issue is the Build Nebraska Act, a 20-year, billion-dollar road construction funding mechanism designed to supplement gas tax revenue. The high profile measure is sure to generate interesting debate in the interim, including expected strong opposition from some sectors.
But that’s the nature of tax debates. It’s all about whose ox is getting gored.
Linehan has indicated she would personally oppose expanded gambling as a source of additional revenue that could fund property tax reduction because it’s the most regressive tax. The committee is open to looking at revenue from electronic video games, newly authorized as games of skill following enactment this year of a bill (LB538) authored by Sen. Steve Lathrop of Omaha.
Perhaps the most difficult part of the quest is finding agreement with the Governor who has heretofore labeled every suggested tax shift as a tax increase. Remember, the most basic explanation of the state tax structure is a three-legged stool comprised of sales tax, income tax and property tax. Getting that thing level has been a struggle since voters abolished taxes in 1966 and left new Gov. Norbert Tiemann with no choice but to reinstitute a balanced tax structure.
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The move cost Tiemann a second term even though he admitted he was more determined to do what was right for Nebraska than to further his own political future. Interestingly, next year’s tax debate comes during an election year for half of the Legislature and a ballot that could have a property tax relief proposal among other controversial issues.
Creighton University economist Ernie Goss has told the committee that "Nebraska is a high tax state (with) a spending problem," arguing that the state overspends both on K-12 education and higher education, based on the median level of regional states.
Eric Thompson, University of Nebraska-Lincoln economist and director of UNL's Bureau of Business Research, has told the committee that eliminating some sales tax exemptions is a viable alternative. But he said the exemptions that could raise the most revenue might be those most difficult to end.
The top five are food, prescription medicine, gasoline, health care services and education services.
Other tax reform options include expanding opportunities to raise revenue at the local level, he said.
So, whose ox is getting gored there?
I admire Linehan’s resolve to get an acceptable tax reform agreement by December 15th. Getting unanimous support from the committee and finding common ground with the Governor is a tall order. But, that’s the nature of a Quest.
J.L. Schmidt has been covering Nebraska government and politics since 1979. He has been a registered Independent for 20 years.