A special legislative committee reviewing the state tax system moves closer to its deadline saying it will take more time and effort to make concrete policy proposals.
There remains much to do and little time left to do it.
“We have just run up against a time concern in trying to get this done,” Tax Modernization Committee chairman, Sen. Galen Hadley of Kearney, stated after an executive session of the committee at the Capitol. “We kind of have identified what we think the concerns the Nebraska people have told us.”
The committee has a deadline of mid-December to submit a proposal to the Unicameral.
During the executive session, the committee reviewed notes and various recommendations on the three main taxes in the Nebraska state tax system: property taxes, income taxes, and sales taxes.
Nebraska relies more heavily than other states on the property tax, deriving 37% of its tax revenue from property taxes. Lessening that reliance is costly. Simply dropping the percentage two points would cost the state $180 million in revenue.
Hadley says the committee wants to study some tax changes further, but has focused on how best to lighten the property tax burden.
“Across the state we did not hear concerns about income tax,” Hadley explained. “Today, the vote on the committee was that the income tax was not a concern of the committee, the majority of the committee.”
The majority voted to leave the state income tax brackets right where they are, though committee members expressed interest in indexing the brackets for inflation, something the state has never done, but is routine in other states.
Committee members also expressed interest in lowering the state take from Social Security benefits.
Otherwise, the focus of the committee has been on reducing property taxes, including a proposal to fold the current $115 million Property Tax Relief fund into the TEEOSA public school funding formula to allow school districts to lower levies. Some sentiment has been expressed to study once again providing aid to local governments, a practice the Unicameral ended in 2010.
A circuit breaker program would provide property tax relief for lower income households as well as retirees.
The committee wants the legislature to study reducing the assessed value of farmland for taxing purposes. Currently, the state assesses agricultural land at 75% of its market value. One proposal would drop the assessment to 65%.
The committee also is considering broadening the state sales tax base to include consumer services not now taxed in Nebraska to offset lowering taxes elsewhere.
AUDIO: Brent Martin reports [:45]