LINCOLN — State lawmakers took aim Monday at two of the biggest tax gripes of 2011.
One measure would reverse a state tax ruling that would cost Omaha taxpayers an additional $7.5 million a year and would deliver unexpected tax bills to several other cities and counties for previously tax-exempt projects.
A second bill would ensure that kids in youth sports programs run by the YMCA or another nonprofit or city-run organization would not have to pay sales taxes to play.
Howls of protest in both cases arose from interpretations of state law by the Nebraska Department of Revenue.
State Sen. Burke Harr of Omaha and two colleagues introduced a bill to tackle the question of whether libraries, stadiums, parking garages and other public facilities built using a "lease-purchase" arrangement should be taxed.
The City of Omaha has used such arrangements to build parking garages, expand city libraries and, most recently, finance TD Ameritrade Park.
But because those facilities are not legally owned by the city, but by nonprofit corporations created by the city, they don't qualify as tax-exempt, according to the Revenue Department.
The state's ruling turned upside down the way dozens of cities and counties across the state had interpreted the law for years.
Harr said he introduced his bill to "restore the status quo."
Such property is essentially city owned, Harr said. It eventually is transferred to the city, county or state when the bonds are paid off, he said. The nonprofit financing corporations are set up by the government entity, with city council or county board members serving as a board of directors.
Harr's proposal would also clarify that steel girders and other materials purchased for construction of such government facilities would be exempt from sales taxes.
"I don't expect any controversy with this bill," he said. "At the end of the day, you're robbing Peter to pay Paul."
He has one powerful co-sponsor: Norfolk Sen. Mike Flood, the speaker of the Legislature, who first raised what he termed "a monster issue" last year. That was after the City of Norfolk was told it couldn't lease-purchase a new city hall building without paying a yearly $24,000 in property taxes.
Omaha City Attorney Paul Kratz said he was pleased Monday to hear that the Legislature was looking at the issue.
If the law isn't changed, Kratz said, the city would not only owe property taxes on parking garages and TD Ameritrade Park, but would also owe sales taxes on materials used to build the ballfield because the state can seek unpaid sales taxes from years past.
Resolving the lease-purchase tax issue was one of the legislative priorities named this year by the Omaha City Council.
Sarpy County officials also confronted the issue in building Werner Park, the stadium used by the Omaha Storm Chasers minor-league baseball team.
But the county avoided the problem by changing the structure of its lease-purchase deal, Deputy County Attorney Mike Smith said. The change put the ownership of the stadium and land with Sarpy County, instead of the nonprofit financing corporation.
State Sen. Abbie Cornett of Bellevue, who chairs the legislative committee that reviews state tax policy, said she has a concern about such lease-purchase deals because they are used as an alternative to taking such projects to voters.
Cornett said she wonders about government taking on more debt without voter approval.
Harr said he understands the concern but said that is a separate issue from resolving the expensive tax question facing projects that were approved years ago.
Also Monday, Cornett introduced a bill to address discrepancies in how youth sports organizations were charging taxes on their programs.
Under Legislative Bill 903, youth sports run by nonprofit groups and cities would not have to charge sales taxes on participants.
Cornett said that it was the public's perception that sales taxes would be charged when kids participated in club sports run by for-profit organizations but that nonprofit groups would be tax-exempt.
She said LB 903 reflects that.
Cornett said that under current state law, all youth sports groups should have been charging sales taxes, but not all were.
Other bills introduced Monday would:
» Address a Nebraska Supreme Court ruling in December that allows someone who lies on an application for employment to still qualify for workers compensation benefits. The ruling raised a ruckus in the business community. LB 909 from Omaha Sen. Scott Lautenbaugh would disqualify those who "knowingly make false statements" about their physical condition in a job application or questionnaire.
» Create an "Armed Forces Pride" license plate for veterans or active military members. It was among four military-related bills introduced by Lincoln Sen. Amanda McGill. Another bill would streamline the process for veterans to obtain state licenses to work as nurses, optometrists and other professional duties that they performed while in the military.
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