Gov. Pete Ricketts has made his pitch for tax relief before the legislature’s Revenue Committee, which also heard warnings about the proposals.
Two tax cut proposals offered by the governor this legislative session drew a packed room as the Revenue Committee held public hearings on LB 337 and LB 338.
Ricketts came to the hearing at the Capitol to personally pitch the proposals, telling members of the committee his proposed cut to the top individual income tax rate and change in farmland assessments have one fundamental goal.
“The vision for my administration is to grow Nebraska, to create jobs and opportunities for our young people to stay here and to attract people from around the country to come here,” Ricketts testified before the committee.
Ricketts argued that tax cuts would make Nebraska more competitive with other states, especially with those which surround Nebraska. He pointed out neither Wyoming nor South Dakota have an income tax and that of the other neighboring states, only Iowa had a higher income tax rates.
LB 337 would shave a percent off the highest individual income tax rate, lowering it from 6.84% to 5.99% over an eight-year period. The one-tenth of a percent stepped decrease in the rate would go into effect each year as long a state revenue is projected to grow by at least 3 ½% in the upcoming fiscal year.
Jason Hayes with the Nebraska State Education Association was among those predicting that adoption of tax cuts will dig the state deeper into a budget hole.
“The bottom line is this, if LB 337 and 338 had been adopted in previous years then today you would be trying to resolve a much larger budget deficit than the roughly $800 million budget gap now before you,” according to Hayes.
The Nebraska Economic Forecasting Advisory Board projects a $900 million dollar revenue shortfall for the upcoming biennium.
Even the revenue growth trigger came under fire.
Rene Fry, executive director of Open Sky, told committee members they should consider Oklahoma as a cautionary tale. She testified that that state had automatic tax cuts which took effect just prior to the oil industry tanking, leaving the state short of funds to offer basic services.
Mark Fahleson with Reform for Nebraska’s Future called the income tax proposal the wrong type of tax relief, arguing Nebraskans want property tax relief first.
The governor’s second proposal, LB 338, would change how farmland is assessed for property tax purposes. It would switch assessments from being based on the market value of the land to the income potential of the land, a system adopted by most farm states, according to Ricketts.
AUDIO: Brent Martin reports [:45]