LINCOLN, Neb. — With their session more than halfway over, Nebraska lawmakers are still struggling to find a tax plan that might prevent farm groups from pursuing a statewide property tax ballot measure in the November general election.
Lawmakers have designated at least five property tax proposals as “priorities” this year, including one backed by Gov. Pete Ricketts that would also lower Nebraska’s top income tax rates. But senators remain divided over which plan to support in a tight budget year that limits their options.
Members of the tax-focused Revenue Committee had been meeting weekly to look at the various proposals, but last week’s session was canceled, as was one scheduled for Tuesday. Sen. Jim Smith, the committee chairman, said he decided not to convene the group because none of the proposals are ready for a vote.
“I’m hopeful that next week, we’ll have a much better idea of whether there remains a path forward for what we’re trying to do,” said Smith, of Papillion.
Smith said he plans to meet with Ricketts during this weekend’s legislative recess to discuss how to proceed.
The Legislature has for years debated proposals to reduce property taxes, but the topic came with a new twist this year after major farm groups threw their support behind a property tax petition drive. If supporters gather enough signatures, voters would decide a proposal that calls for a refundable income tax credit equal to half of the school district taxes levied on their property.
Nebraska Farm Bureau President Steve Nelson stressed that his group would prefer to address the issue through the Legislature, but he said the ballot measure will remain an option in case lawmakers don’t pass anything. Backers of the ballot drive have said they hope it will prod lawmakers to pass major property tax legislation this year.
Organizers of the ballot drive have already started gathering the roughly 85,000 signatures required to place the issue on the ballot. Nelson said they can’t afford to wait for lawmakers because they need time to beat a July 5 submission deadline.
“Economic times in agriculture are difficult right now, and pressure to deal with this has become stronger and stronger,” Nelson said. “Our members want to solve the problem one way or the other.”
Ricketts is still working with lawmakers in hopes of passing a tax relief bill that unites urban and rural senators, said spokesman Taylor Gage. Ricketts has criticized the ballot proposal, saying it would require the state to dramatically raise income or sales taxes or cut essential government services. The measure would cost an estimated $262.7 million in its first year, an expense that would rise sharply over time.
Gage said lawmakers still have plenty of time to act.
“Governor Ricketts remains committed to working with pro-growth senators to get tax relief done,” Gage said.
The governor’s bill would eliminate Nebraska’s existing property tax credit program, which benefits all property owners regardless of whether they live in the state, and shift more money into a new credit that only helps resident homeowners and agricultural landowners.
Using the property tax credit fund doesn’t sit well with some rural senators, however, because it already helps lower some property tax bills.
“Why would I give that up, when I’ve got it in my hand already?” said Sen. Mike Groene, of North Platte.
Sen. Curt Friesen, a Henderson farmer who serves on the Revenue Committee, said he’s still optimistic lawmakers will pass something this year, although he questioned whether it would be enough to satisfy advocates for the ballot drive. Friesen said he’d rather have lawmakers address the issue instead of placing the issue on the ballot.
“Obviously we’re running short on time, but that’s not a valid excuse on our part,” he said.
Property taxes on agricultural land increased nearly 164 percent between 2006 and 2016, according to the Nebraska Department of Revenue. Friesen has introduced a bill that would guarantee a minimum amount of state aid to all public K-12 schools.
The Yes to Property Tax Relief campaign saw a surge in interest from volunteer circulators after it formally launched last month, said Director Trent Fellers. The group is also using paid, professional circulators, with an initial focus on Omaha and Lincoln.
Fellers said his on-the-ground workers have had an easy time gathering signatures, even in larger cities, because homeowners are starting to see sharp increases in their residential property taxes.
“Nebraskans know property taxes are too high. That’s why they’ve been asking the Legislature to give them relief for so many years,” he said. “We’re confident we’ll be successful.”
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