LINCOLN, Neb. (AP) — A tax package championed by Nebraska Gov. Pete Ricketts fell into limbo Tuesday after drawing criticism from lawmakers, including some fellow conservatives who say it doesn’t do enough to help farmers.
Lawmakers passed over the measure without a vote after roughly three hours of debate, as they’ve done with other bills facing a legislative filibuster.
Sen. Jim Smith, of Papillion, the bill’s sponsor, now has to show support from a 33-vote supermajority of senators before the speaker of the Legislature will return it to the agenda. The bill has to win first-round approval by Friday to have a shot at passing in the final days of this year’s session.
“I would not continue this fight if I did not think there was a path” to overcoming the filibuster, Smith said after the debate.
Smith touted the legislation as the only realistic option to address property and income taxes in this year’s session.
Even so, the bill opened a sharp divide among lawmakers, including some who have pitched their own plans to lower property taxes. None have passed.
“This is one of the most ridiculous pieces of legislation that I’ve ever seen,” said Sen. Steve Erdman, of Bayard, a fellow Republican who is pushing for a much more aggressive statewide property tax ballot measure — an approach Ricketts opposes.
One measure by Sen. Tom Briese of Albion would ease pressure on property taxes by increasing the state sales and cigarette taxes and eliminating more than two dozen sales tax exemptions. Another bill would guarantee a minimum amount of state aid for Nebraska’s public K-12 schools, the main driver of property taxes.
The governor’s proposal would offer income tax credits to reimburse a portion of the property taxes paid by agricultural landowners and homeowners. Commercial property wouldn’t see any new benefits, but the bill would lower Nebraska’s top corporate income tax rate and pump $5 million a year into job training programs.
Homeowners would get a tax credit equal to 1 percent of their total property taxes in 2018, capped at $25. Agricultural landowners would get a credit totaling 2 percent of their property tax bill, with no cap. The credits would increase over time, but opponents said they wouldn’t keep pace with inflation.
Sen. Curt Friesen, a farmer from Henderson, said the bill doesn’t provide a substantial amount of benefits and fails to address the core problem of state financing for schools, which forces districts to compensate with local property taxes.
Others raised concerns that the bill would create long-term budget problems for the state. Supporters haven’t specified how they’ll pay for the tax package after the first year.
“It places us in a situation where we’re not able to respond to urgent needs,” said Sen. Kate Bolz, of Lincoln, a member of the budget-crafting Appropriations Committee.
The latest version of the proposal would cover the first-year cost by drawing approximately $40 million from the cash reserve, a fund intended for emergencies and one-time expenses. Lawmakers have repeatedly tapped it the last few years to balance the state budget and invest in projects such as road construction.