LB 613 wins strong support in the legislature, moving forward on a 47-to-1 vote.
Revenue Committee chairman, Sen. Galen Hadley of Kearney, told colleagues during floor debate hearings might have run against proposals to overhaul the tax system, but not completely against reform.
“And the themes were that people think that maybe our tax system has not completely responded to a new, modern economy,” Hadley stated.
Those hearings drew strong opposition to LB 405 and LB 406, alternative tax overhaul proposals supported by Gov. Dave Heineman.
The main proposal would have scrapped the state income tax system in exchange for the elimination of certain sales tax exemptions. The state collects $2.095 billion annually in individual income taxes, according to the governor’s office. It collects $270 million in corporate income taxes, for a total of $2.365 billion.
The state grants approximately $5 billion in exemptions from the sales tax. The governor had proposed eliminating about half of those to offset the loss in state income tax revenue.
Opposition was led by business and agricultural groups, which argued that lifting the exemptions would cut profitability and make Nebraska less competitive than other states.
LB 613 would establish a commission, formally entitled the Tax Modernization Commission. The Speaker of the Legislature and a number of lawmakers would sit on the commission. It would receive advice from the Legislature’s Fiscal Analyst, tax experts from the University of Nebraska, as well as from the Tax Commissioner and Property Tax Administrator from Nebraska Department of Revenue.
The commission is to make a thorough review of the state tax code, weighing its fairness, competitiveness, stability and adequacy.
The commission would be required to file a preliminary report with the Unicameral and the governor by December 15th. The deadline for the final report would be November 15th of 2014.
Commission would continue to meet at least once a year afterward.
The dissenting vote to the bill came from the senator who held up the vote for days.
Sen. Ernie Chambers of Omaha launched a filibuster against the measure, angered that the Revenue Committee had not released a bill of his for full legislative debate.
Chambers sponsored a number of amendments, proposing minor wording changes to the bill, some of which were adopted.
Though the legislature voted to end his filibuster, Chambers remained undaunted.
“This legislature has a responsibility and if I cannot make you assume it by reasoning with you, then I’m going to bludgeon you,” Chamber threatened.
The bill will return for another round of debate. If it passes the second round, it moves to final consideration of the legislature.
AUDIO: Brent Martin reports [:45]
AUDIO: Sen. Galen Hadley discusses LB 613 during floor debate. [4:20]