Gov. Pete Ricketts supports his own plan for property tax relief, which would increase the state’s property tax credit program and would limit growth in spending of property tax dollars.

LINCOLN — Gov. Pete Ricketts joined home builders and Realtors on Thursday in criticizing proposals to reduce property taxes being floated in the Nebraska Legislature.

Previously, the conservative Republican has stood with craft brewers and grocers to oppose proposals that would raise taxes on beer and junk food.

Thursday, the target was a proposed doubling of the state documentary stamp fee that is assessed when a person buys a new home, commercial building or land. Under a proposal discussed by the Legislature’s Revenue Committee, that fee would double from its current $2.25 for each $1,000 of property being sold.

Representatives of the Home Builders Association of Lincoln and the Nebraska Realtors Association said that raising the cost of housing via a tax increase would hurt the state’s economy and could prevent some people from purchasing a home.

Ricketts took aim at the Revenue Committee, saying it has adopted a “theme” of proposing that some taxes be increased to reduce property taxes. That approach, he said, “has to stop.”

“We’ve tried this before, and it’s failed,” he said.

Ricketts touted his own plan, which would increase the state’s property tax credit program by $51 million a year, to $275 million, and would limit growth in spending of property tax dollars to no more than 3% a year.

He also revealed Thursday that there’s some new money, about $34 million in fiscal year 2020-21, that could be applied toward property tax relief if the Legislature decided to do that. That extra money is expected via the Medicaid program after the federal government has recalculated, to Nebraska’s advantage, its match rate for funding the state-federal health care program.

So far, the Revenue Committee, which crafts tax policy, has reacted coolly to Ricketts’ ideas for property tax relief. The eight-member panel on Wednesday night declined to advance the 3% lid proposal, and barely advanced the increase in the property tax credit.

Instead, the committee outlined a proposal, Legislative Bill 289, that would increase state aid to local schools by more than $400 million a year to reduce local property taxes, which are among the highest in the nation. The plan calls for a ½-cent increase in the state sales tax, a handful of other, smaller tax hikes, and using most of the property tax credits.

State Sen. Lou Ann Linehan of Elkhorn, the committee’s chairwoman, said the governor and her committee are “not that far apart.” She said Ricketts needs to drop the notion that raising one tax to lower another is a bad idea. Linehan said that’s what the property tax credit does already, by using state income and sales tax revenue to offset local property taxes.

Linehan added that the property tax reduction package being formulated by the Revenue Committee is still a work in progress. On Wednesday, for instance, the committee’s proposal changed again. Several proposed repeals of sales tax exemptions were dropped, including taxing bottled water, pet care services and labor on home repairs.

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LB 289 is already getting opposition from rural senators, who said it doesn’t do enough to provide tax relief for farmers and ranchers, who’ve seen their property tax bill explode in recent years. In some rural districts, the increase in state aid to schools doesn’t exceed the loss in property tax credits given to local farmers and ranchers, said Henderson Sen. Curt Friesen.

Omaha Sen. John McCollister, who sits on the Revenue Committee, said Thursday that he’s still assessing LB 289, but he said there’s a chance that the Legislature won’t agree on a comprehensive property tax relief proposal this year.

His fellow committee member, Sen. Brett Lindstrom of Omaha, said that if that happens, lawmakers could turn back to the governor’s proposal to increase the property tax credits, which would provide some relief.

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paul.hammel@owh.com, 402-473-9584

Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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