LINCOLN, Neb. (AP) — Nebraska lawmakers remained sharply divided Tuesday over a proposal that seeks to lower property taxes by increasing sales and cigarette taxes and boosting state aid for K-12 schools, but the bill’s sponsor said she still believes a compromise is possible.
The bill drew criticism as lawmakers kicked off a debate on property taxes, one of the top issues of this year’s session and a constant complaint of farmers, ranchers and homeowners throughout the state.
Its sponsor, Sen. Lou Ann Linehan, of Omaha, said she believes the bill still has a decent chance of passing despite objections from a handful of senators. Gov. Pete Ricketts fervently opposes the bill as well because it would raise a variety of taxes and eliminate sales tax exemptions on 20 different services, including car repairs, haircuts, tattoos and lawn care.
The state would also tax candy, pop, bottled water and raise the cigarette tax from 64 cents to $1 per pack. The revenue generated would boost state funding for schools while restricting their taxing power in an effort to reduce property taxes.
“I am very optimistic, personally,” Linehan said after lawmakers adjourned for the day. “I think we’ve got a lot to do before we get to the end of the session.”
Supporters, including a coalition of major farm groups, argued that the measure would help restore balance in a tax system that has increasingly tilted the burden onto local property taxpayers.
They also said it’s important to restore funding to rural schools that have lost state equalization aid because they’re flush with valuable farmland. Farmers contend they’re shouldering an unfair share of the cost when their incomes have fallen sharply.
“It’s very clear and very important to know that a yes vote is a vote for property tax relief and a vote no is a vote against property tax relief,” said Nebraska Farm Bureau President Steve Nelson.
Linehan said the bill would update Nebraska’s tax system by taxing more services, which have become a larger portion of the state’s overall economy.
Sen. Tom Briese, an Albion farmer who supports the bill, said the measure would address the long-term shift of the state’s tax burden onto rural Nebraska.
“Property taxes are choking off economic growth across the state,” he said.
Sen. Curt Friesen, a farmer from Henderson, said he decided to support the bill even though he thinks lawmakers should have done more to mitigate the soaring property taxes farmers have seen in the last decade.
But Sen. Ernie Chambers, of Omaha, angrily denounced the bill as “cruel, heartless and unfeeling” because it could disproportionately hurt the poor.
Chambers said he opposed the proposed sales tax increase as well as new taxes on haircuts and pet care services. He scoffed at arguments that, even with the increase, Nebraska’s sales tax rate would remain competitive with neighboring states.
“What do I care about other states?” he said. “I live here. The poor people I see here live in this state. Is it competitive for poor people?”
Sen. Adam Morfeld, of Lincoln, said he was concerned that the bill would restrict the taxing authority of Lincoln Public Schools, the state’s second-largest school district and one of its fastest growing, with many students who have special needs.
“Yes, we’re investing a lot more in education, but it’s at a loss to the school districts that appear to be growing the fastest,” he said. “That doesn’t make much sense.”