{"id":23864,"date":"2018-04-03T11:41:23","date_gmt":"2018-04-03T17:41:23","guid":{"rendered":"http:\/\/update.legislature.ne.gov\/?p=23864"},"modified":"2018-04-06T13:49:24","modified_gmt":"2018-04-06T19:49:24","slug":"income-tax-credit-on-paid-property-taxes-debated","status":"publish","type":"post","link":"https:\/\/update.legislature.ne.gov\/?p=23864","title":{"rendered":"Income tax credit on paid property taxes stalled"},"content":{"rendered":"

Senators considered a proposal April 3 to provide income tax credits that partially offset the amount that Nebraskans pay in property taxes.

\"Sen.
Sen. Jim Smith<\/figcaption><\/figure> <\/p>\n

As introduced by Papillion Sen. Jim Smith on behalf of Gov. Pete Ricketts, LB947 would eliminate the state\u2019s current property tax credit program and instead would provide Nebraska homeowners and agricultural and horticultural landowners a refundable state income tax credit equal to 10 percent of their property taxes paid. <\/p>\n

The bill also would reduce the top individual and corporate income tax rates to 6.69 percent by 2020 and would transfer $10 million to a job training fund.<\/p>\n

Smith said that the state\u2019s income tax rates, overreliance on tax incentives and high property taxes make it uncompetitive with other states when trying to attract new businesses. <\/p>\n

A pending Revenue Committee amendment would replace the bill, instead providing a refundable state income tax credit for agricultural and horticultural landowners equal to 2 percent of their property taxes paid beginning this year. The credit would increase in annual increments until it reaches 20 percent in 2027. <\/p>\n

Homeowners would receive a 1 percent income tax credit on their property taxes paid this year, with a $25 cap for 2018. The credit would increase to 20 percent by 2030, when it would be capped at $500. <\/p>\n

The amendment would maintain funding for the current property tax credit program at $224 million annually. <\/p>\n

The proposal also would decrease the state\u2019s top corporate income tax rate\u2014which is applied to taxable income in excess of $100,000\u2014from 7.81 percent to 6.84 percent over five years. Individual income tax rates would not change.<\/p>\n

Finally, the amendment would direct the state treasurer to transfer $5 million from the state\u2019s cash reserve fund to a job training fund and approximately $34 million to the state\u2019s general fund to cover the proposal\u2019s cost for the first year. <\/p>\n

LB947 is the only property tax relief bill that could garner enough votes to advance from the Revenue Committee this session, Smith said, and its failure to pass could increase the odds that voters will approve a proposed ballot initiative that mirrors LB829, introduced by Bayard Sen. Steve Erdman. That bill would provide Nebraskans a refundable state income tax credit equal to 50 percent of their property taxes paid to school districts during the taxable year.<\/p>\n

Smith said that Erdman\u2019s proposal would leave the state with a $1.1 billion budget shortfall next year that could be filled only by cutting state spending and by raising other taxes. He said his proposal, which would provide for $600 million in property tax relief when fully implemented, is a more responsible approach. <\/p>\n

\u201cSen. Erdman\u2019s alternative is dangerous,\u201d Smith said. \u201cYou will not be able to cut enough to pay for LB829 or the ballot initiative cost.\u201d<\/p>\n

Sen. Lydia Brasch of Bancroft supported the amendment, saying that LB947 would provide \u201cslow and gradual\u201d increases in property tax relief. <\/p>\n

\u201cIf we would have done this 10 years ago, we would have that 20 percent reduction and a better three-legged stool,\u201d she said, referring to the state\u2019s tax system, which comprises income, property and sales taxes. <\/p>\n

North Platte Sen. Mike Groene also supported the amendment, saying that another property tax relief proposal that came before the committee this session would raise taxes without controlling school spending. <\/p>\n

\u201cI stand in support of [the amendment] because at least it doesn\u2019t raise my taxes,\u201d he said. <\/p>\n

Erdman opposed the amendment, saying that other bills, including his LB829, offer more substantial property tax relief. Erdman said that a 2 percent credit on an agricultural landowner\u2019s property tax bill is not enough when valuations on agricultural land have increased approximately 5.6 percent per year over the past 12 years. <\/p>\n

\u201cI didn\u2019t come here to take this back to my people and say this is property tax relief, because this is not property tax relief,\u201d he said. \u201cThis is too little, too late.\u201d<\/p>\n

Erdman filed a motion to bracket the bill, which effectively would end debate on it for this session. The motion failed on a 9-25 vote.<\/p>\n

Sen. Burke Harr of Omaha supported the amendment\u2019s increase in workforce development funding, but he said the state could not afford the proposed credits and rate cut. Ricketts has asserted that the state can afford the proposal based on a growth rate of 6 percent, Harr said, but the Legislature\u2019s economic forecasting board predicts that Nebraska\u2019s economy will grow by only 4.9 percent next year. <\/p>\n

Harr added that, under the amendment, he would have received a $25 credit on his most recent property tax bill of more than $6,200.<\/p>\n

\u201cIf you think that amounts to a hill of beans, you\u2019re crazy,\u201d he said. \u201cIf you think that appeases me and says the property tax problem is solved, you\u2019re crazy. <\/p>\n

Sen. Curt Friesen of Henderson said he could not support the amendment because it does not address the state\u2019s overreliance on property taxes to fund its public schools.<\/p>\n

\u201cI\u2019ve always said I\u2019m willing to work to accomplish this over a period of years,\u201d he said, \u201cbut to do this over a period of 12 years is not substantial, it\u2019s not upfront and it doesn\u2019t deal with school funding the way I\u2019ve envisioned it.\u201d<\/p>\n

Lincoln Sen. Kate Bolz said that the amendment\u2019s increasing cost over time would leave the state unable to fund priorities like education, child welfare services and the Department of Correctional Services. The amendment would reduce the state\u2019s cash reserve fund to approximately $256 million, only about 35 percent of the Appropriations Committee\u2019s goal, she said. <\/p>\n

\u201cThis isn\u2019t the right proposal, and it isn\u2019t the right time,\u201d Bolz said.<\/p>\n

Sen. Tom Briese of Albion also questioned how the state would pay for the proposal. Briese said his LB1084, which would raise the state sales tax rate and eliminate several state sales tax exemptions on services, would provide more property tax relief more quickly than LB947. <\/p>\n

\u201cYou\u2019re not going to deliver the immediate and substantial property tax relief that Nebraskans need without changing how we pay for things,\u201d he said, \u201cand that means replacing property taxes with other forms of revenue.\u201d <\/p>\n

The Legislature moved to the next item on the agenda before voting on the committee amendment or the bill. Per a practice implemented last year by Speaker Jim Scheer, the sponsor of a bill that is facing a potential filibuster must demonstrate sufficient support for a cloture motion before the measure will be scheduled for additional debate.<\/p>\n","protected":false},"excerpt":{"rendered":"

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