LINCOLN - Fiscal concerns and a filibuster from a handful of conservative senators sank a proposal Wednesday that would have afforded a $325 million sales tax exemption for Omaha-area residents.
The tax break would have come over 20 years, on fees being paid to finance a $2.6 billion upgrade of the city’s sewer, water and natural gas lines.
Omaha Sen. Tom White introduced Legislative Bill 952, saying it was unfair to “pile on” by levying a sales tax on top of fees that will be paid to finance the unfunded federal mandate to reduce raw sewage discharges into the Missouri River.
Those fees, he has said, will rise to $50 a month per household by 2017, thus requiring $3.50 more for sales tax. White argued that the state could soften the blow by not requiring the sales tax.
“We have a history in this state of trying to help out cities who are facing a fiscal jam,” he said.
But other lawmakers said the state could ill afford to give up what Sen. Deb Fischer of Valentine said would amount to $19 million in sales tax revenue next year.
Fischer said doing without the revenue would require more cuts in state spending.
“I’d challenge my colleagues: What are you willing to give up to pass this bill?” she asked.
York Sen. Greg Adams, chairman of the Legislature’s Education Committee, said Nebraska faces cuts in state aid to schools that would be exacerbated by changing a 43-year-old tax policy to allow a tax exemption for such mandated public-works projects.
“We’re going to have a lot of holes to fill next year. I don’t want to start digging them deeper now,” Adams said.
Omaha Sen. Gwen Howard, who switched her vote from “yes” during first-round debate to “not voting” Wednesday, said she had talked to Omaha Mayor Jim Suttle, who has opposed the sewer bill.
She said Suttle told her that without the sales tax revenue, property taxes in Omaha would have to rise by 3 percent.
“I think I’m already paying too much,” Howard said, holding her property tax statement of $4,454.
But Sens. Bob Krist and Brenda Council, both of Omaha, said imposing a sales tax on the new fees that are needed to pay off the sewer project was unfair to metro residents.
Bellevue Sen. Abbie Cornett said it was particularly unfair for Sarpy County residents, who also must help pay for the upgrades in Omaha.
White, who is running against Rep. Lee Terry, R-Neb., for the 2nd District congressional seat, contended that Omaha could manage without its portion of the sales tax revenue about $46 million over 20 years by cutting spending.
He decried the use of “parliamentary tactics to push a tax increase on one-third of our state’s citizens.”
Because of the filibuster, it took 33 votes to halt debate. That is eight more than needed to advance the bill to final round debate, and eight more than the bill got on first-round debate. The vote, after four hours of debate Wednesday, was 23-22.
Only one Omaha area senator voted no: Sen. Beau McCoy said he was concerned that the tax break would not only affect an unfunded federal mandate the sewer separation project but also a related project. That is a $1 billion replacement of aging water and natural gas pipes being undertaken by the Metropolitan Utilities District while the streets are torn up.
Contact the writer: