Documentary stamp tax increase amended, advanced

A bill that would fund additional programs and services with an increase to a tax paid by the seller of a house advanced to select file April 9 after lawmakers amended it to also cut inheritance tax rates.

Currently, counties collect a documentary stamp tax at a rate of $2.25 for each $1,000 in value on the transfer of real estate. Counties remit all but 50 cents of each $2.25 collected to the state treasurer, who credits the proceeds to funds related to affordable housing, site development, homeless shelter assistance and behavioral health services.

LB1363, as introduced by Omaha Sen. Mike McDonnell, would have increased the rate to $3.50 for each $1,000 in value and directed the proceeds to several additional uses.

A Revenue Committee amendment would have increased the rate by only 35 cents for each $1,000 in value and eliminated proposed distributions to federally qualified health centers, the Nebraska Film Office Fund and businesses linked to military bases.

The amendment failed on a vote of 24-9. Twenty-five votes were needed.

McDonnell introduced an amendment, adopted 25-10, that instead would raise the rate to $3.25 for each $1,000 in value. It would retain originally proposed distributions for military-related programs, innovation hubs, federally qualified health centers and the establishment and operation of an office to pursue and coordinate grant funding on behalf of the state.

Among the programs that would receive funding, McDonnell said, is one that helps military members transition to the civilian workforce upon retirement.

McDonnell’s amendment also contains provisions of LB1067, introduced by Sen. Robert Clements of Elmwood, that would cut the inheritance tax rate that applies to remote relatives from 11% to 8% and the rate that applies to all other beneficiaries from 15% to 8%.

Additionally, the amendment would allow counties to retain $1.15 of each $3.25 in documentary stamp tax collected.

Clements supported the amendment, saying it would allow counties to retain an additional $11 million in documentary stamp tax revenue, more than enough to offset an estimated $8 million reduction in inheritance tax collections.

Norfolk Sen. Robert Dover opposed the amendment, saying any documentary stamp tax increase should be used to provide affordable housing. Dover said he supported the various programs in McDonnell’s amendment but called the documentary stamp tax an “inappropriate” source of funding.

“If these things are important,” he said, “why can’t we fund them with general funds?”

Senators voted 27-10 to advance LB1363 to the second round of debate.