The Douglas County Board voted unanimously Tuesday to oppose Gov. Dave Heineman's call to abolish the inheritance tax, which generates millions of dollars annually for the state's largest county.
Board members hope the nonbinding resolution draws attention from the Nebraska Legislature and encourages lawmakers to back off.
The measure to eliminate the tax, Legislative Bill 970, was introduced by State Sen. Abbie Cornett of Bellevue.
The tax is paid by those who inherit property, cash or other assets from deceased relatives. It is sometimes confused with an estate tax, which the state collected until it was eliminated in 2007.
County Board members say the inheritance tax is used for state-mandated services that support military veterans, the frail, elderly and children.
"The state says Nebraska counties have to pay for these services, but then it takes away our funding mechanism," said board chairman Marc Kraft. "This is simply a tax shift that will force us to raise property taxes."
In 2010, the board voted to raise property taxes after several of the county's full-time officeholders complained about plans to cut their operating budgets across the board by 4 percent.
Last year, the board agreed to keep the property tax rate the same — 26.5 cents per $100 of assessed valuation — even though the Legislature eliminated state aid to local governments.
Kraft and others in county government argue that eliminating the inheritance tax will result in a tax shift that will force the county to find new ways to collect revenue.
Kraft said the inheritance tax affects less than 1 percent of all families in Douglas County. But it's a big revenue generator.
Douglas County typically receives $8 million to $9 million annually from the inheritance tax.
"Many people who inherit money already pay little or no tax on what they receive," Kraft said. "A property tax increase will have an impact on almost everyone in the county."
Proponents of ending the inheritance tax say county governments will have to make some tough choices, including combining services and eliminating positions that taxpayers cannot afford in this economy.
County Board member Mary Ann Borgeson maintained that Douglas County has made significant cuts in the past couple of years as it grapples with flat revenue from property tax collections.
She wants the state to give counties the authority to enact a countywide sales tax to make up for lost revenue, should the inheritance tax be dissolved.
"Hopefully, they would be willing to talk to us about a countywide sales tax in place of the inheritance tax," she said.
Borgeson said the county has reduced its full-time work force by about 100 employees, primarily through attrition, over the past 18 months to trim personnel costs.
"It's not like we're just sitting back and it's business as usual," Borgeson said, adding, "We are looking for ways to reduce spending or do business differently."
In other areas, the county's efforts to cut spending are not so apparent.
Despite a projected $5 million revenue shortfall in 2012-13, the County Board in November allocated more than $200,000 to increase pay for about 300 managers and nonunion workers, raises that took effect this month.
The 1 percent across-the-board salary increase included more than 40 county officials who make $100,000 or more, including managers, sheriff's captains and health center psychiatrists.
The board also approved a three-year collective bargaining contract for 95 youth detention employees that included a 3 percent retroactive raise for 2010, 2.5 percent for 2011 and 2.5 percent for 2012.
It was the latest of several union contracts that granted raises last year.
County administrators have not aggressively pursued plans to consolidate the Douglas County Sheriff's Office crime lab with the City of Omaha's.
The county's lab primarily exists as a regional facility to perform forensics services and laboratory work for outside agencies.
Contact the writer:
402-444-1056, john.ferak@owh.com
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