Tax commission and economic development oversight proposed

The Executive Board heard testimony Feb. 19 on two proposals seeking planning information for the future of Nebraska’s tax system.

LB613, introduced by Columbus Sen. Paul Schumacher, would establish the Tax Modernization Commission to review and recommend updates to Nebraska’s tax code.

The commission would comprise the speaker of the Legislature and members of the appropriations, health and human services, revenue and legislature’s planning committees.

Ex-officio members would include the Legislature’s fiscal analyst, tax experts from the University of Nebraska and the tax commissioner and property tax administrator from state Department of Revenue.

Schumacher said the state needs to engage in strategic planning to respond to changes in Nebraska’s economy.

“LB613 creates a structure going forward … in order to develop tax policy in the state,” he said. “It gives us an opportunity for public input before – rather than after – the introduction of legislation.”

The bill would direct the commission to consider fairness, competitiveness, simplicity and compliance, stability, adequacy and complementary tax systems as it evaluates Nebraska’s current tax code.

Under the bill, the commission would provide a preliminary report to the Legislature and the governor by Dec. 15, 2013, and a final report would be due by Nov. 15, 2014. The commission would continue to meet at least once per year to review and evaluate the tax code.

Kearney Sen. Galen Hadley, chairperson of the Revenue Committee, testified in support of the bill, saying it would help the state engage in equitable tax reform. The commission would provide valuable information to current senators developing bills for next session, he said.

“If we wait two years out, we are in a brand new Legislature and the learning curve starts all over,” Hadley said.

Renee Fry, executive director of the OpenSky Policy Institute, also testified in support of the bill, saying Nebraska’s tax structure has not kept up with changes in the state’s economy.

“Nebraska hasn’t had comprehensive tax reform since 1967,” she said.

Schumacher also introduced LB612, which would require the state Department of Revenue to supplement required reports regarding various economic development incentive programs by appearing once every two years before a joint hearing of the Legislature’s appropriations and revenue committees to present the reports and provide supplemental information.

Among the programs included would be the:
• Quality Jobs Act;
• Invest Nebraska Act;
• Nebraska Advantage Act;
• Employment and Investment Growth Act; and
• Nebraska Advantage Rural Development Act.

Schumacher said economic development programs currently do not undergo periodic review in the same way that programs receiving state appropriations do. Such programs should be discussed in an open forum in order to evaluate how well they are working, he said.

“Those are things that need the give and take of an open public hearing in order to determine,” Schumacher said.

The committee took no immediate action on either bill.