LINCOLN — State Sen. Tom White’s bill would provide a $325 million tax cut over 20 years for Omaha-area residents and similar tax breaks to smaller cities and towns facing similar, unfunded federal mandates.
But the proposal faces an uphill climb in the Nebraska Legislature, the Omaha senator said Monday, because of opposition from Omaha Mayor Jim Suttle and the tight fiscal times facing the city and state.
“They want the money, and it’s tough,” White said. “You know how tight it is around here.”
He spoke after first-round debate began on his bill to create a state and city tax exemption for infrastructure projects that are the result of federal mandates, such as the massive sewer reconstruction work planned in Omaha to comply with the Clean Water Act.
Upwards of $2.6 billion is expected to be spent to redo the city’s aging sewer system and to replace obsolete water and natural gas pipes.
State and city sales taxes will be levied on some pipe purchases and on all the sewer, water and gas fees paid by Omaha-area residents to finance the reconstruction work.
White maintains that is an unfair “double tax.”
Legislative Bill 952 has drawn opposition from the Omaha City Council and Mayor Suttle, who say the bill might force a property tax increase if the city had to forego its portion of the sales tax revenue.
During floor debate Monday, two leading senators argued that the state would be hard pressed to do without the estimated $280 million it would collect on the sewer/water project.
“That is a significant amount of money,” said State Sen. Lavon Heidemann of Elk Creek, chairman of the Appropriations Committee. “We’ve got to be careful. We’re going to lose the revenue.”
York Sen. Greg Adams, who chairs the Legislature’s Education Committee, said he doesn’t want to give up part of the state’s sales tax base, particularly if it would cause a cut in state aid to K-12 schools.
White said that philosophically, it is wrong to tax “government directives.”
He listed several towns, from Bridgeport to Tecumseh, that are dealing with similar federal mandates for water and wastewater projects. White said his bill would provide relief to them, too.
Debate ended Monday before the bill could come up for a first-round vote.
To advance the bill, 25 votes are needed. Lobbyist Walt Radcliffe, hired by Suttle to help defeat LB 952, said White is very close to obtaining that number.
Other senators and lobbyists, however, said White would be hard-pressed to pull together enough votes to pass the bill because of the fiscal cost.
Some predicted that politics will play a role. White, a Democrat, is running for the seat now held by U.S. Rep. Lee Terry, R-Neb.
But Omaha Sen. Bob Krist, a Republican in the nonpartisan Legislature and a co-sponsor of White’s bill, said he didn’t see it as a partisan issue. He said it was one of fairness, pointing out that if the federal government financed the Omaha project, there would be no sales tax paid.
White will be absent Tuesday, so first-round debate on LB 952 is not expected to resume until Wednesday or Thursday.
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