Don Walton: Property tax reduction options on the table

September 17, 2018

Last week’s tax reform discussion at a Platte Institute legislative forum in Lincoln appeared to open the door more widely to consideration of some avenues that might be ready to be explored.

Suddenly, repeal or adjustment of some sales tax exemptions, including those on services, might actually be on the table along with the tax incentives contained in the state’s business attraction and promotion program.

The goal of senators who are airing those possibilities is to find sufficient revenue to fund substantial local property tax relief.

That would mean shifting, rather than increasing, the tax load among property, sales and income taxes.

However, in doing that, some Nebraskans would end up paying more taxes while some would be likely to pay less. And that is perilous political ground.

Altering the state’s broad range of tax exemptions, credits and incentives — without increasing any tax rates — always has been a potential source of new revenue to fund property tax reduction.

But that option has effectively been kept off the table by an iron political rule that there can be no increase in taxes in any form.

Sen. Tom Briese of Albion offered a proposal last year to mix some of both.

His measure would have increased the state sales tax rate by half a cent while boosting the cigarette tax rate, eliminating a number of sales tax exemptions and credits and making a range of other tax changes in order to fund substantial property tax relief while assuring adequate funding for schools.

The odds always are that the Legislature will not be able to reach an agreement on major tax reform.

A broad consensus is required to attract the 33 votes that would be needed to break a filibuster by opponents in the 49-member Legislature.

And 30 votes then would be required to override a potential gubernatorial veto.

A brand new Revenue Committee will tackle the issue next year.

Five of its eight members will be new; and there will be a new chairman following the departure of former Sen. Jim Smith.

The daunting task of leading the committee will fall to one of three candidates for chairman: Sen. Brett Lindstrom of Omaha, Sen. Curt Friesen of Henderson or Sen. Lou Ann Linehan of Gretna.

The 2019 legislative session will be a long one, beginning deep in the winter on Jan. 9 and ending as summer approaches on June 6.

Lots of time to attempt to reach consensus.

But the odds of doing so are long.

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Medicaid expansion funding may also be a major topic on next year’s legislative agenda.

If voters approve expansion of Medicaid coverage to an estimated 90,000 Nebraskans, most of whom can be described as the working poor, senators will need to fund a new program that the Legislature has rejected seven times.

That would present a budget and/or revenue challenge to resolve.

Estimated state costs revealed last week would be $19.8 million in fiscal 2020, rising to $32.2 million in fiscal 2021.

In exchange, the state would benefit from $786 million in federal funding flowing into the state and its economy during those two years. Federal assistance would balloon by another $572 million the following year, bringing the three-year total of new federal dollars pumped into Nebraska to more than $1.3 billion.

Appropriating the state funding match would add an interesting dynamic to next year’s legislative session in view of the fact that most state senators probably would continue to oppose Medicaid expansion.

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Finishing up:

* Foul ball: Lincoln Chamber of Commerce President Wendy Birdsall says the Chamber opposes the term limits ballot initiative that was crafted to prevent Mayor Chris Beutler from seeking re-election, citing its retroactive nature and arguing that “it offends our sense of fair play.”

* Even if the numbers may not be precise, the dramatic decline of support for President Trump in Nebraska measured by the latest Morning Consult survey must have caught the eye of the state’s Republican candidates and members of Congress. Down from 56-33 approval in January 2017 to 49-48 last month.

* Ben Sasse may not be “the most interesting man in the world,” but he’s getting closer. His new ethics reform legislative package pushed nearly all of the most sensitive buttons in Washington with the exception of campaign funding, a serious ethics problem whose solution has been sharply limited by the U.S. Supreme Court.

* Cancellation of a second gubernatorial debate between Gov. Pete Ricketts and Democratic challenger Bob Krist that would have been televised statewide from Wayne clearly is a blow to the Krist campaign. But it’s also a setback for Nebraska voters in terms of assuring they are more fully informed.

* And now, an upset in Ann Arbor.

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