Tax proposals narrowed, advanced to final round

Lawmakers scaled back three tax-related measures on select file April 11 to reduce a projected budget deficit at the end of the next fiscal biennium.

Elkhorn Sen. Lou Ann Linehan, chairperson of the Revenue Committee, said it was necessary to “trim” the proposals so that they would result in smaller reductions in state revenue.

Sen. John Stinner of Gering, chairperson of the Appropriations Committee, supported the amendments. He said the bills, if passed, would result in the state’s Cash Reserve Fund falling approximately $314 million below the minimum by the end of fiscal year 2024-25.

Nebraska law requires the state to maintain a reserve of no less than 3 percent in excess of the state’s appropriations and obligations.

Stinner said the proposed changes are intended to reduce that shortfall to less than $100 million.

LB927, introduced by Omaha Sen. Rich Pahls, would allow political subdivisions to use state turnback tax assistance under the Convention Center Facility Financing Assistance Act to acquire, construct, improve and equip nearby parking facilities.

Sen. Rich Pahls
Sen. Rich Pahls

Currently, state sales tax collected by hotels within 600 yards of an eligible convention and meeting center facility is included in the turnback provision. As amended on general file, LB927 would extend the radius to 1,200 yards.

Linehan introduced an amendment on select file to eliminate that extension, which the state Department of Revenue estimates would reduce state general fund revenue by $3 million in FY2022-23. It would reduce revenue by $3.1 million in FY2023-24 and $3.3 million in FY2024-25.

Senators voted 30-9 to adopt the amendment.

LB1261, introduced by Sen. Dave Murman of Glenvil, would increase the amount of tax credits available each year under the Nebraska Advantage Rural Development Act from $1 million to $25 million beginning in 2022.

During select file debate on the proposal, Linehan introduced an amendment, adopted 37-1, that instead would increase the cap to $10 million per year.

LB984, introduced by Columbus Sen. Mike Moser, would increase the amount businesses receive for collecting and remitting state sales and use tax.

As amended on general file, it also would allow manufacturers, which are exempt from paying sales and use tax on qualified machinery and equipment, to appoint a contractor as a purchasing agent so that the contractor can purchase those items on behalf of the manufacturer free of sales and use tax.

Linehan filed an amendment, adopted 35-0, to strike that provision, which she said would have reduced state revenue by approximately $30 million over the next three fiscal years.

After adopting the amendments, senators advanced all three bills to final reading by voice vote.

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