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How Will the Legislature Spend Your Money?

How Will the Legislature Spend Your Money?
By Governor Pete Ricketts
May 20, 2019
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With less than two weeks left in the session, Senators are starting to wrap up their work.  A final round of debate is left on the state budget, which includes important priorities such as K-12 school funding, public safety initiatives, and property tax relief. 
Over the past four years and during this session, property tax relief has been my number one priority.  With this budget, Senators are poised to approve an increase of $51 million for a total of $275 million in property tax relief annually for all property owners.  If this is approved, we will have nearly doubled the direct property tax relief to taxpayers in the last five years with total property tax relief and state aid to local government at over $2 billion annually.
In addition to direct relief, Senators throughout the session have also weighed additional property tax proposals.  Some of these would make needed reforms such as moving ag land from a market value system to an income potential system for tax purposes.  Others proposed a refundable tax credit, which would give tax relief from the state for the local property taxes Nebraskans paid.  Unfortunately, these proposals, which are good for Nebraska’s families, did not pass.  In addition, several key Senators proposed ideas that would increase taxes to spend more of your hard-earned money on local government.
Over the past few months, Senators have proposed raising taxes by cutting back on direct property tax relief, hiking the tax on buying a house, increasing the sales tax, raising the cigarette tax, and imposing sales tax on new items.  Their proposals have evolved throughout the session.  This week, one Senator is expected to make one last attempt to raise taxes.  The latest plan is contained in AM 1846 to LB 183, which is awaiting second-round debate.
The new tax proposal includes taxes on home repair services (roofing, siding, electrical, plumbing, HVAC, and painting) veterinary services, moving services, storage services, car repairs, bottled water, candy, pop, ice, clothes cleaning (dry cleaning and laundry services), Uber, Lyft, personal care, hair care, nail care, skin care, hair removal, tattoos, body modifications, interior decoration, limousine and taxi rides, lawn care, gardening, landscaping, parking services, swimming pool cleaning, dating services, escort services, telefloral delivery, wedding planning, weight loss programs, and personal training.
There are a lot of problems with this proposal, and I will run through a few here.
First, it isn’t truly tax relief.  The Legislature would be raising taxes on one group of people to give tax relief to another.  When the Legislature does tax relief, they need to focus on doing tax relief for all Nebraskans.
Second, these tax increases would make homeownership more expensive.  According to Zillow, Nebraska home values have risen on average from $118,000 in 2010 to $164,000 in 2019, or a 39% increase.  Imposing a new tax on home repair services like plumbing and HVAC, would increase the expense by up to 8%.  The Legislature and I have worked to make housing more affordable with programs like the Rural Workforce Housing Fund, and we should avoid proposals that reverse this progress.
Third, the people that will bear the burden of these new sales taxes are working Nebraska families.  Middle- and low-income families will proportionally pay more of these taxes.  This will be particularly true for the 34% of Nebraska households that rent.  Renters are unlikely to see the benefit of property tax relief, but will pay more for goods and services that Nebraskans use every day.
Finally, we need to make progress on bringing down tax rates overall and controlling spending.  The Legislature has tried in the past to raise taxes to put into local government spending, and in the end it just results in bigger government.  For example, the Legislature raised the sales tax and income tax in 1990 to lower property taxes.  It didn’t work.  School property taxes went down for two years and by the third year we were back at the same level as 1990 with more than double the spending on state aid to schools and no tax relief.  The Legislature’s goal should be to lower tax rates and do tax relief for all Nebraskans instead of taking more of your money.   
There’s just a handful of working days left in the legislative session, but it is important that you stay engaged with your Senator.  Please consider taking a moment to pick up the phone and give them a call.  You can find their contact information  If you would like to contact me on this issue or any other, please email or call 402-471-2244.