Mayoral hopeful Stothert proposes returning Omaha sales tax windfall to taxpayers

Omaha city councilwoman Jean Stothert speaks during a public forum for the mayoral candidates, sponsored by the Metro Omaha Property Owners Association, on Jan. 14.

An Omaha mayoral candidate pledged to reduce the city's property and sales tax rates and eliminate the controversial restaurant tax if a sweeping state tax policy overhaul is approved.

City Councilwoman Jean Stothert said she would propose that local property taxpayers would receive, dollar-for-dollar, any sales tax windfall the City of Omaha sees from reforms to income taxes at the state level.

Gov. Dave Heineman's tax reform pitch, already endorsed by mayoral candidate and State Sen. Brad Ashford, would eliminate or scale back income taxes and replace lost revenue by eliminating several sales tax exemptions.

Proponents say the revenue cities would generate from that overhaul could total in the tens of millions. Stothert said Omaha could see anywhere from $35 million to $216 million in new sales tax revenue, depending on the changes made. Other estimates have ranged from $40 million to more than $100 million.

Stothert said Omahans and business owners have “struggled with stifling property taxes for years” and that tax reform at the state level could lead to significant local tax cuts.

“Gov. Heineman's plan to eliminate state income taxes is bold,” she said in a press release. “We must also be bold, both to seize the opportunity for real reform at the local level, and to keep those dollars out of the hands of those who want to spend it.”

The governor, Stothert and others have acknowledged it's difficult and too early to project an accurate increase in local sales tax revenues.

If cities benefit, Heineman said he would expect a good share of the money to go toward property tax relief. But he also would explore whether the state could recapture some funds to help finance his proposed $2.4 billion tax shift.

Stothert's comments came amidst increased jockeying from Omaha's mayoral candidates.

Former City Council member and attorney Dan Welch formally unveiled his campaign's first television commercial Tuesday.

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