A filibuster succeeds and a tax cut package has failed in the Unicameral.
Gov. Pete Ricketts proposed the idea which became Legislative Bill 461, sponsored by Sen. Jim Smith of Papillion.
Smith had brought the package to the floor earlier. Legislators debated it for three hours. It returned Tuesday to an uncertain fate. That fate became clear with a 27-9 vote on a cloture motion by Smith to end the filibuster and go to a first-round vote. Smith needed 33 votes to break the filibuster. Thirteen senators abstained.
The package took criticism from two sides.
First, some legislators objected to considering tax cuts in a year in which lawmakers are drafting a two-year state budget suffering from a billion dollar tax revenue shortfall.
Second, some legislators objected to the tax relief mix.
Sen. Tom Briese of Albion spoke for some rural legislators who argued the package pushed for income tax relief at the expense of property tax cuts.
“Colleagues, if we’re serious about growing our state we have to be serious about property tax relief and if we’re serious about tax relief, we shouldn’t be supporting LB 461 as written,” Briese said during Tuesday’s legislative debate.
LB 461 proposed cutting the top state individual and corporate tax rate gradually, at about one-tenth of a percent at a time until it dropped from the current rate of 6.84% to 5.99%. Any reduction would only occur during a fiscal year in which state tax revenue was projected to grow by at least 3 ½%. Corporate taxes would be cut if state revenue is projected to grow by 4%. LB 461 also would increase the earned income tax credit designed to help low-income families.
The measure would change the valuation method used to asses agricultural land for property tax purposes from the current market-based method to one based on the income potential of the land.
In an effort to attract rural support, it would have provided an additional $20 million to the state property tax relief fund.
Smith promised further enhancement during second-round debate if legislators voted to end the filibuster and advance the bill. The compromise would have stretched implementation of the income tax reduction over an even longer period of time and it would have increased the funding to the property tax relief fund to $45 million.
That last-minute attempt to sweeten the deal for rural senators brought a quick response from the leading opponent of LB 461, Sen. Burke Harr of Omaha.
“So, here we are, hour five and now, now we want to negotiate?” Harr asked.
Nothing helped move enough votes for Smith to overcome the filibuster.
“It’s a bad day for Nebraska and if we are going to be competitive in this state, we’re going to have to do something with our tax code,” Smith told reporters after the vote.
Smith had insisted a cut to the income tax rate would stimulate the state economy, bringing people and businesses to the state, which would increase state revenue.
Could LB 461 be revived this session?
“It’s hard for me to see a path forward at this point.”
AUDIO: Brent Martin reports [:55]