LINCOLN — Nebraska lawmakers girded for another vote to override a gubernatorial veto after giving final-round approval Thursday to a bill allowing Omaha and other cities to increase their local sales taxes by a half-cent, with voter approval.
Senators voted 30-15 on final passage of Legislative Bill 357.
That vote, if it holds, would be enough to overturn a promised veto by Gov. Dave Heineman.
Meanwhile, a bill was delivered to the governor Thursday that he will sign into law: a package of state income tax cuts.
The tax cuts, passed on a 39-9 vote, were trimmed by more than half from what Heineman originally proposed because of budget concerns. The repeal of a state inheritance tax was dropped, as was a proposed cut in state corporate income taxes.
The measure will eventually provide a $67-a-year break for a married couple with $50,000 in adjusted gross income and a $145-a-year tax reduction for a couple with an income of $100,000 or higher.
The governor on Wednesday repeated his pledge to veto the sales tax bill, saying it represents a tax increase that will make the state less competitive in attracting new business.
“Increasing the sales tax by one-half of a cent on working men and women in the city of Omaha and potentially other Nebraska cities is a huge mistake,” Heineman said.
But supporters of the bill, led by State Sen. Brad Ashford of Omaha, said the measure simply gives voters a choice on local tax policy.
In Omaha, passage of the tax would automatically end the city's tax on restaurant and bar tabs.
“There's nothing more democratic than allowing people to vote on important matters like tax policy,” Ashford said.
The half-cent sales tax bill has been a priority for the City of Omaha, which has argued that it needs the option to deal with budget issues.
The city's chief lobbyist, Jack Cheloha, said it will take a lot of work to override the governor's expected veto, but “I like our chances.”
The measure went through several proposed makeovers, but its final version focuses on allowing cities to use the new revenue for infrastructure projects, such as new streets and Omaha's federally mandated $1.7 billion sewer separation project.
In Omaha, five of the seven City Council members would have to agree before the measure would be put on the ballot. Voters would then have to approve the increase.
The increase would automatically end after 10 years, or when any bond issue to fund the infrastructure projects was paid off.
In Omaha, half of the anticipated $43 million annual new revenue would be used to replace money raised through the restaurant tax. The rest would go to infrastructure projects.
The City of Lincoln, which supported LB 357, is eyeing the money to finance an after-school program that lost its federal funding and to help fund construction of a proposed south beltway around the city.
Amendments also brought the support of a key legislator, State Sen. Mike Flood of Norfolk, the speaker of the Legislature. Flood said the additional revenue from a half-cent sales tax increase could help his community finance a new natural gas pipeline, which is needed to attract business to the northeast Nebraska city.
Earlier this week, lawmakers overrode a gubernatorial veto of a $2.5 million payment to subcontractors that had not been fully paid after a private child-welfare administrator dropped out of its state contract. Another veto fight is expected over a controversial bill to restore taxpayer-funded, prenatal care for the unborn babies of illegal immigrants.
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