Gov. Pete Ricketts must convince state lawmakers his tax cut package makes more sense than a much larger one proposed by a state senator.
Ricketts proposes converting money in the state property tax relief fund into credits to reduce property taxes as well as lower the state individual and corporate income tax. He announced the plan during his State of the State address to lawmakers Wednesday.
Ricketts remains skeptical of a $1 billion tax cut plan being floated in the Unicameral.
“If we were to pass a bill that has a $1.1 billion impact on our budget, that’s 25% of our budget. That will have dramatic results,” Ricketts says, adding that could lead to deep budget cuts, perhaps even to school funding. The governor suggests it also could lead to an increase in other taxes to offset the loss of revenue.
Sen. Steve Erdman of Bayard proposes a 30% cut in property taxes; a $1.1 billion package.
Legislative Bill 829 would provide a 50% income tax refund or credit for each dollar of property taxes which go toward the funding of public schools. Typically, 60% of the property taxes paid in Nebraska fund public education.
Erdman emphasizes his proposal would not affect local governmental funding. It would be the obligation of the state to make up the $1 billion cost of his proposal. And Erdman favors the legislature making budget cuts to pay for it.
If the Unicameral balks at his plan, Erdman plans to take it to a vote of the people in November.
Ricketts insists lawmakers can have more certainty working with him rather than risking a ballot vote. The governor also points out he has a proposal to pay for his plan.
“What we have proposed actually lays out a framework for how we can actually deliver it,” Ricketts says. “It isn’t just promising something, it’s actually showing how we can actually deliver on it as well.”
Ricketts proposes using money already allocated to the Property Tax Credit Relief Fund to provide $200 million in property tax relief for agricultural and residential property as well as $40 million in cuts to individual and corporate income taxes. Cuts to the income tax would take place only if state revenue increases sufficiently. The proposal also calls for $5 million annually to be used for workforce development.
AUDIO: Brent Martin reports [:45]