There are many controversial issues still ahead of the 103rd Legislature that must be resolved before the session is over in less than 30 days, and I anticipate many long evening sessions to complete the work necessary for the state to continue to function.One of my bills, which will provide property tax relief to Nebraskans, was incorporated into the budget bill.
The bill would move $25 million from the cash reserve to the Property Tax Credit Fund to offset and mitigate state mandates that are thrust upon our local government agencies by state government.
The state aid for schools formula, which consumes over $1 of every $4 in Nebraska tax revenue, now excludes over 45% or 120 of Nebraska's 249 school districts from support and is obviously badly broken, but the simple fact is that rural senators are outnumbered in the body and developing a new formula will not take place this year.
My objective in moving the $25 million was to shift some revenue from the general fund to the property tax credit fund to try and give some relief to property taxpayers across the state.
The idea has developed significant support, and I believe an additional $20 million will be moved to the property tax credit fund on Monday, March 10.
The revenue committee heard another of my bills last Friday which earmarks revenue generated under the federal “Marketplace Fairness Act” to the property tax credit fund. You are probably not familiar with the Marketplace Fairness Act that was passed by the U.S. Senate in February and is under discussion in Washington.
This bill enables the federal government to begin the collection of sales tax on behalf of the states on sales which take place over the Internet or through catalog sales. Each Nebraskan is required by law to pay a sales tax on items they purchase from outside Nebraska, but the merchant selling the items to you is not required to collect it.
The Department of Revenue would have to audit every Nebraskan's credit card or checking account to prove the tax is not being paid, which is not feasible. Accordingly, very few Nebraskans pay the tax.
The Marketplace Fairness Act enables the state to collect their rightfully due sales tax from the merchant who will now be required to collect it on behalf of the states.
I earmarked that revenue to the property tax credit fund, because it is new money. If it becomes available without a fund designation, it would enter the state budget under the general fund. The estimates for the amount of revenue which this tax would generate vary widely from around $15 million to well over $100 million, but most projections place it at around $40 million dollars.
Obviously that would be a significant increase in funding for the property tax credit fund.
Unfortunately, the bill is stalled in committee on a 4-4 vote.
Some senators are willing to bring the bill to the floor, but only if I change the language and designate that the funds go towards general tax relief. That is just not an acceptable solution to me since I heard very little about lowering tax rates on anything but property when I toured the state last year with the Tax Modernization Committee.
When I ran for this office, I stated that property taxes were one of the key barriers to success in rural Nebraska. They are among the highest in the nation and must have some significant attention, but so far the focus has been largely on exempting other forms of income tax.
While I support those efforts too, I can't help but feel that rural Nebraskans are again being forgotten, and that the special interests and wealthy in Omaha will be the prime beneficiaries of tax reform. That is a bitter pill for me to swallow.
As always, I value your input, and welcome phone calls, emails and personal visits from you.
Sen. Al Davis, State Capitol, PO Box 94604, Lincoln, NE 68509, (402) 471-2628, firstname.lastname@example.org