Gov. Pete Ricketts remains committed to find the tweaks which will sell his tax-cut package in the Unicameral, even as he criticizes a competing plan.
Ricketts says he continues to talk with legislators and others in an effort to get the right combination of property and income tax relief to pass this legislative session.
Ricketts says the petition drive seeking to place on the ballot a $1.1 billion cut in property taxes could result in the raising of other taxes to offset the lost revenue.
“We can’t talk about a billion dollars in relief if we can’t figure out a way to make sure we pay for it,” Ricketts tells reporters during a news conference. “And that’s certainly one of the challenges I think proponents of some of the other bills have. They haven’t necessarily offered up how they’re going to pay for it or, if they have, it’s through tax increases. You can’t raise a tax to reduce a tax. It doesn’t work that way. That’s not actual real tax relief.”
Ricketts contends that if the billion-dollar tax cut passes, legislators will be forced either to make drastic budget cuts or to increase other taxes to offset the loss in income, such as an increase in the sales tax.
Legislative Bill 829, sponsored by Sen. Steve Erdman of Bayard, seems destined to be decided by Nebraska voters. The Revenue Committee has not acted to move the bill to the full legislature for debate. Erdman has said if the Unicameral fails to pass his measure, he would back a petition drive to place it on the ballot. This week, petitioners began soliciting the signatures necessary to place the proposal on the November ballot.
The Erdman proposal would give property owners a refundable income tax credit equal to half of the property taxes collected by their local school district. The state would make up the loss of income to the local school districts. It would amount to a 30% cut in property taxes and is estimated to cost $1.1 billion.
Ricketts supports LB 947, sponsored by Sen. Jim Smith of Papillion, chair of the Revenue Committee, on behalf of the governor. Under the governor’s proposal, the legislature would convert the Property Tax Credit Relief Fund to provide refundable income tax credits for agricultural property owners as well as homeowners. Tax credits would begin at 12% with a cap of $280 for homeowners. The credits would increase by 2% every other year until they reached 30% in 2031. The residential caps would rise $50 with each increase.
The plan calls for $200 million in property tax relief for agricultural and residential property as well as $40 million in cuts to individual and corporate income taxes.
Ricketts says his proposal fits within the state budget.
This is the short, 60-day legislative session. Lawmakers began day 31 today.
Ricketts says lawmakers have only two things they must do this session: make up for a state budget shortfall and approve a tax-cut proposal.
AUDIO: Brent Martin reports [:50]