Bill to eliminate residential water tax advanced

Residential water service in Nebraska could become less expensive under a bill advanced from general file April 26.

LB26, introduced by Sen. Justin Wayne of Omaha, would exempt the gross receipts received from the sale, lease or rental of and storage use or consumption of residential water services.

Wayne said the state currently does not tax bottled water. It also exempts water used in manufacturing and agriculture because it is viewed as an “essential input” in those industries.

“[Drinking] water is essential for human life,” Wayne said.

Sen. Rich Pahls of Omaha supported the bill. He said the cost to the state in lost revenue from other water tax exemptions is more than $40 million a year. The state Department of Revenue estimates that LB26 would reduce general fund revenue by $4.6 million in fiscal year 2021-22 and $7.8 million in FY2022-23.

“This is a fairness issue,” Pahls said.

Albion Sen. Tom Briese also spoke in support, saying the bill would provide a small measure of tax relief to many Nebraskans.

“This relief gets disbursed to most of our population, probably more so than many of the other things we do in [the Legislature],” Briese said.

Columbus Sen. Mike Moser opposed the bill. Municipalities also tax residential water service, he said, and LB26 could cause cities and towns to look to property taxes to offset the loss of revenue.

“I think a property tax is worse than paying a sales tax,” Moser said. “Little bit by little bit, we’re giving up revenue and we’re not spending less.”

Lawmakers advanced the bill to select file on a 38-3 vote.