LINCOLN, Neb. — A new attempt to reduce Nebraska property tax bills opened a familiar divide Thursday between farm groups that have grown impatient with state lawmakers and business groups that want income tax cuts in the mix.
Sen. Steve Erdman of Bayard presented the bill to the Legislature’s Revenue Committee, arguing that it would benefit urban and rural taxpayers.
Erdman said lawmakers have shifted the state’s tax burden onto local governments over the last four decades, resulting in higher property taxes.
“This proposal puts some money back in the pockets of taxpayers, who can spend it better than lawmakers,” Erdman said.
Erdman’s proposal, called the Property Tax Relief Act, seeks to offset what property owners pay using income tax revenue. Starting in January 2019, taxpayers would receive a refundable income tax credit equal to half of the school district taxes levied on their property.
Erdman and farm groups have said they’ll try to put the issue on the November general election ballot if lawmakers don’t act this year. On Thursday, a spokesman for two major business organizations said they’ll launch a campaign to fight the ballot measure if it gets that far.
Gov. Pete Ricketts opposes the measure as well, so much so that he recently used campaign money to circulate a flyer attacking it. The Republican governor has said Erdman’s bill would require the state to dramatically raise taxes or cut essential services.
Nebraska farm and business groups have been at odds the last few years over whose taxes to cut. Farm groups are demanding property tax reductions in the face of land values that rose sharply over more than a decade, while business groups say income tax cuts would help the state compete with its neighbors.
“Battling over property taxes for another year without action is unacceptable,” said Robert Johnston, a Clearwater farmer representing several agriculture groups.
Business groups painted the bill as a tax shift and noted that previous attempts to lower property taxes using state money have failed.
The bill “is not just the wrong answer. It’s the worst possible answer,” said Jim Greisch, a volunteer for the Greater Omaha Chamber.
The measure would cost the state an estimated $262 million in its first year and increase annually, according to the Nebraska Department of Revenue. Erdman declined to say how he would pay for the measure, saying lawmakers should make that decision.
The department said the bill still has technical problems that would prevent all property-owning taxpayers from claiming a credit — and if lawmakers fix that problem, the cost to the state would rise faster. Property taxes are levied by local governments, and the state can only influence them indirectly.
Trent Fellers, who is organizing the ballot drive, said he isn’t optimistic that lawmakers will pass a substantial property tax cut this year.
“We’d like to see it happen, but history could repeat itself,” said Fellers, of the group Reform Nebraska’s Future.
Lawmakers have passed a handful of property tax measures over the last decade, most often by steering state money into a tax credit fund that offsets what property owners have to pay.
Yet attempts to pass new property measures have faced growing resistance recently, in part because a majority of senators now come from Omaha, Lincoln and other cities where property taxes haven’t risen as quickly.
This story has been corrected to show that Greisch is a volunteer, not a lobbyist, for the Greater Omaha Chamber.
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