State lawmakers have advanced a tax cut proposal, but one that is about a third of what Gov. Dave Heineman proposed.
A tax cut package that would total slightly more than $97 million over three years moved forward on a 36-6 vote.
“I think the deal has been cut and that’s part of the process and it is what it is,” a frustrated Sen. Danielle Conrad of Lincoln conceded toward the end of three hours of floor debate.
Conrad became a vocal opponent of the tax cut, calling it unaffordable. She told colleagues that though the package had been changed drastically, the fiscal circumstances facing the state hadn’t changed at all. She and other critics charged that the cut in state revenue would worsen a projected state budget deficit of $460 million to more than half a billion; a shortfall legislators would face next year while working on a new, two-year state budget.
Sen. Norm Wallman of Cortland questioned the timing.
“I’m deeply concerned why we even ask for a tax cut in this year, coming off a recession,” Wallman stated.
Yet, the trimmed measure attracted broad support. The Revenue Committee attempted to put some lawmakers at ease by initially trimming the measure to $148 million, but that wasn’t enough to calm worries about the impact the tax cut would have on future budgets. Legislative leaders worked with the governor to settle on the $97 million package. Individuals and families in the lower three income tax brackets would receive tax relief, both through lower rates and broadened brackets. A proposed cut for individuals and families in the highest tax bracket was dropped as was the proposal to eliminate the inheritance tax, which is collected by counties.
The tax cut would total nearly $8 million in the first year, $33.7 million in the second year and $55.6 million in the third year.
The compromise won over Sen. Heath Mello of Omaha and Sen. Jeremy Nordquist of Omaha, who previously had been critical of the governor’s plan. They stated the new plan targeted lower and middle income taxpayers and made the state individual income tax more progressive.
Sen. Beau McCoy of Omaha said it’s the right thing to do.
“And I think the purpose of this tax cut is to leave more money where it belongs, in the hands of the people of Nebraska who earned it in the first place,” McCoy stated during the debate.
The revised LB 970 faces another round of debate, plus a final vote before it can move to the governor’s desk.
AUDIO: Brent Martin reports [:50]