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Panel rejects bill to cut taxable value of Nebraska farmland; business tax exemption advances

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LINCOLN, Nebraska — A property tax measure backed by Nebraska Gov. Pete Ricketts and farm groups stalled in a legislative committee on Wednesday, with opponents arguing it wouldn't help farmers as many believe.

The bill to reduce the taxable value of Nebraska farmland received only two votes of support in the eight-member Revenue Committee. The Republican governor and the Nebraska Farm Bureau supported the measure, but opponents said it would shift the tax burden to residential homeowners and prompt local school districts to raise tax levies to make up for lost revenue.

Opponents also said the measure, which would lower the taxable value of farmland from 75 percent to 65 percent, was mostly symbolic because it wouldn't deliver the savings that farmers wanted.

The bill's sponsor, Sen. Lydia Brasch of Bancroft, said farmers and ranchers have repeatedly called on lawmakers to act and urged committee members to advance the bill to show they listened to those concerns. Ricketts has argued that soaring values of agricultural land have created an unsustainable situation for farmers and ranchers, but values have recently started to dip.

In a statement, Ricketts said he was disappointed with the committee's decision but would continue to work with its members to reduce property taxes. Ricketts asked the committee to reconsider its decision.

"Nebraska's farmers and ranchers need and deserve meaningful property tax relief because taxes on agricultural land have dramatically increased in recent years," Ricketts said.

Nebraska Farm Bureau President Steve Nelson said his group was extremely disappointed with the vote. Nelson said property taxes levied have increased more than 160 percent over the last decade, a rate more than three times the state's commercial and residential sectors.

"Nebraska farm and ranch families shouldn't be punished through our tax system because land, the most important asset in raising food, can't simply be picked up and moved to another state like assets for other businesses," Nelson said.

The committee also rejected a bill that would have phased in income and property tax cuts over eight years.

The bill's sponsor, Sen. Jim Smith of Papillion, pulled the legislation after the committee rejected an amendment meant to make it more appealing by cutting the cost to the state and using the money to benefit agriculture land owners.

"It's achievable, it's responsible, it's modest," Smith said of the plan, crafted by the Omaha-based Platte Institute, a free-market think tank.

Opponents noted the bill would lower the state's top tax bracket, which would benefit the wealthy more than the middle-class. They said it would eventually leave the state with a $120 million budget hole that future lawmakers would have to address.

The committee advanced a bill that would create a tax exemption for equipment, furniture and other personal property used by businesses.

"Every little bit helps," said Sen. Mike Gloor, chairman of Revenue Committee. "We're still talking about moving forward."

Gloor said the state's budget-focused Appropriations Committee has already proposed an additional $45 million annually for the state's property tax credit fund, which reduces what all homeowners and landowners pay.

In addition, he said the state faces higher costs for Medicaid, the Department of Health and Human Services, and the state's embattled prison system. Lawmakers have about $41 million at their disposal for legislative priorities that aren't already part of the two-year budget.

Gloor said lawmakers could still act on other tax bills this year, but the larger problem lies with Nebraska's school-aid formula, which distributes state money to school districts. More rural districts are losing state equalization aid because of soaring farmland values, but farmers in those districts say they're already shouldering too much of the local tax burden.

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