LINCOLN–Two bills proposed for financial and tax restructuring in Nebraska hit a wall of opposition Wednesday.
The bills, LB468 and LB452 each had a single proponent while drawing six and 19 opponents, respectively.
LB468, introduced by Sen. Bob Krist of Omaha, is intended to freeze revenue and tax provisions for two years. The bill also would direct sales tax revenues on motor vehicles, motorboats and other vehicles that now go to the State Department of Roads and Game and Parks Commission to the state general fund, which uses income and sales taxes for other state appropriations and projects, such as health and human services.
The bill would freeze the tangible personal property exemption and the special capital gains exception for 2018 and 2019. It would also make no adjustments for inflation for income tax brackets during those years.
“With a $900 million shortfall, I think it’s time to start looking at all the potential loss of revenue, and eventually reversing it into an increase in revenue,” Krist said.
Renee Fry, executive director of OpenSky Policy Institute, spoke in favor of the bill saying it would help track state spending.
Fry noted that in the past 10 years, spending for the Nebraska Department of Roads, Nebraska Game and Parks have increased 62.6 percent and 51.2 percent, respectively, while overall state spending has increased 42.2 percent.
“We simply have concerns that when we create earmarks or other tax expenditures, it becomes difficult to evaluate the whole budget picture,” Fry said.
Most of the opposition to the bill came from people who didn’t want to see the Department of Roads lose any funding.
Kyle Schneweis, director of the Nebraska Department of Roads, said that his department’s funding can’t be reduced. He said future projects would be delayed and current projects might have to stop due to lack of funds if the bill is passed.
Doug Williams, president of the Associated General Contractors of Nebraska, agreed that funding shouldn’t be reduced for roads.
“To keep our infrastructure going, we need to make sure that construction companies are working here and able to give some input into the Nebraska economy,” Williams said.
LB452 met with even more opposition.
Introduced by Sen. Brett Lindstrom of Omaha, the bill aims to reduce or eliminate several sales tax exemptions based on certain incomes. Some of these sales tax exemptions include cabs, ride-sharing apps, storage facilities, newspapers, laundromats and the Nebraska lottery.
LB452 would also add a sales tax to personal care services such as haircuts, cosmetics and massage therapy.
The bill would also change the current income tax structure, with four income brackets, to only having three. Lindstrom said this would effectively collapse the lower two tax brackets into one. He said it would help working families with income tax relief.
Fry opposed his bill saying that not only does it not help the middle class, it would contribute to their tax burden. She also said that if the bill were enacted now, the wealthiest 1 percent of Nebraskans would receive more than $5,600 in annual tax savings.
Many people with jobs related to the bill’s proposed new sales taxes also came to show their opposition. Massage therapists, barbers, laundromat owners, transportation employees and Uber employees all said that the taxes on these services would be a heavy burden to their businesses.
“It’s crossing a line to put a sales tax on a department that’s in health and human services,” said Marcia Harper, a cosmetologist from Omaha.
Bills like these may have promise in their effort to lower income taxes, but Fry said there must be other ways to do it.
“If what you’re wanting to do is to reduce taxes on middle class families, this bill isn’t going to do it,” Fry said.