County-wide sales and use tax considered

Counties could impose a local option sales tax in addition to a city’s local option sales tax under a bill heard by the Revenue Committee Jan. 18.

Under current law, counties may impose a sales and use tax of 0.5 percent, 1 percent or 1.5 percent within the county but outside any municipality that has adopted a local sales and use tax.

LB884, introduced by Omaha Sen. Burke Harr, would authorize a county to impose its own tax in addition to a municipality’s. It also would allow counties to use that sales and use tax revenue for economic development or the development of manufacturing or industrial sites.

Harr said Nebraska missed an opportunity to attract a new Toyota plant last year partly because it did not have a large enough site ready for construction. LB884 would help counties prepare sites for similar manufacturers by authorizing counties to collect sales taxes on any transactions within their boundaries. He said any tax would require a vote of the county’s citizens.

“You can’t have an increase without the people saying yes to it,” he said.

Larry Dix, executive director of the Nebraska Association of County Officials, testified in support of the bill. He said more and more companies are interested in moving to Nebraska but not necessarily to a large city. Because counties can rely only on property taxes to generate revenue for economic development, Dix said, they lack the resources to prepare sites for manufacturers like Toyota, which required at least 1,000 acres.

“We’re trying to figure out, when the Toyotas of the world show up, what can [counties] do?” he said. “We are so, so limited that we might as well go stand in the corner.”

Testifying in opposition to the bill was Lynn Rex, executive director of the League of Nebraska Municipalities. The League does not object to allowing counties to use a sales tax for economic development, she said, but it is opposed to authorizing county sales taxes on top of existing local option taxes.

“We had to fight and scrap to get local option sales taxes for municipalities,” she said. “We’re concerned about having yet another layer of tax on top of municipalities.”

The committee took no immediate action on the bill.