It appears unlikely any major tax cut proposal will come before the legislature next year.
Tax Modernization Committee chairman, Sen. Galen Hadley of Kearney said the committee report identifies the problems, but doesn’t propose solutions.
“Each senator can read the report and the Revenue Committee is going to be looking at it now and looking at individual bills to try to address some of these concerns, the recommendations, that we came up with,” Hadley told reporters during a news conference on the report.
Hadley says the real problem in the discussion of tax reform is money.
The committee reports lowering the individual income tax by half a percentage point would cost state revenue $320 million. To adjust the property tax more in line with Nebraska’s neighboring states would cost approximately $300 million.
Those who appeared before the Tax Modernization Committee complained most about property taxes.
Hadley acknowledged property taxes are too high in Nebraska and increased state aid to the schools could help.
“It seemed like we consistently heard across the state that the schools, the amount of property tax going to schools, needed to be shifted – part of that needed to be shifted – to the state.”
Nebraska provides around $900 million in state aid to public schools. The committee has suggested that increasing that amount could allow public school districts to roll back their levies. Also, the legislature ended state aid to local governments. If reinstated, cities and counties could reduce local property taxes.
Hadley suggested the committee might have been able to write a different report if it had more time. He pointed out the committee had six months to identify the problems, identify a solution, and propose legislation that could pass in a 60-day session.
The Tax Modernization Committee was comprised of 14 state senators. Four did not sign the report: Sen. Charlie Janssen of Fremont, Sen. Beau McCoy of Omaha, Sen. Pete Pirsch of Omaha, and Sen. Ken Schilz of Ogallala.
Click here for a link to the full report.
AUDIO: Brent Martin reports [:45]