LINCOLN — A “plan B” has emerged in the great property tax relief debate of 2019, one that a chief author thinks will overcome the opposition of the state’s largest school districts.
The plan seeks a smaller increase in state sales taxes — ¼ cent rather than ½ cent — increases cigarette taxes by a larger amount — $1 a pack — and doesn’t have the elaborate changes in state aid to K-12 schools that are in another proposal, Legislative Bill 289, which failed to advance from first-round debate last week.
Opposition from the state’s largest school districts, such as Omaha, Millard and Lincoln, was a big factor in the failure of LB 289 to get off the launch pad. Gov. Pete Ricketts also spoke out against the bill.
Sen. John McCollister of Omaha, one of the co-authors of the new plan, said he pledged to do something about high property taxes this year, and the new proposal is an effort to do that by trying to win the support of the big school districts.
“We’re just looking for a path forward,” he said. “I’m not sure we’ve hit it yet.”
Time is running out on the 2019 session. The speaker of the Legislature, Sen. Jim Scheer of Norfolk, says he’s looking at ending the session “earlier than the anticipated end date of June 6. That would give any property tax relief plan less time to be debated and passed, as well as overcome an expected veto from Gov. Pete Ricketts, who is opposed to removing tax exemptions on pop, candy and other items as proposed by lawmakers.”
Because LB 289 failed to advance after three hours of debate, under the speaker’s rules, a sponsor would have to demonstrate support from 33 of the 49 state senators for the bill, or an amendment, to revive the issue for debate.
On Monday, one of the main sponsors of LB 289, Sen. Lou Ann Linehan of Elkhorn, was urging her colleagues to register their support. But during debate on a different bill, Linehan gave a pretty dismal assessment of its chances: “Nobody loves (LB 289). I actually don’t love it.”
But later, she said LB 289 still has a better chance of passing than the new plan because it solves the “two problems” facing the state: high property taxes and the shortage of state aid to K-12 schools.
“You need something that has a chance, maybe half a chance,” Linehan said.
The new plan was drawn up by McCollister and Sens. Curt Friesen of Henderson and Sue Crawford of Bellevue. It would incorporate the repeal of several sales tax exemptions, as called for in LB 289, but would funnel a much smaller amount, about $87 million, to K-12 schools in the form of state aid. Most of that new aid, about $50 million, would cover special education costs in local schools.
One aspect of the new plan that might win more support from rural senators was a steep increase in the state’s property tax credit program, from its current $224 million to $474 million. McCollister said that would probably be a temporary increase, with the money eventually being used in a new state aid formula that would be devised via an independent study called for in plan B.
Friesen, a leading rural senator, said it makes sense to enact the revenue portion of LB 289 this year, then give more study to changes in the state aid formula.