Sewer fee exemption advances

LINCOLN — By the narrowest of margins, state lawmakers gave first-round approval to a bill Thursday that would provide a sales tax exemption on the $2.6 billion-plus bill Omaha-area residents will pay to upgrade their sewer, water and natural gas lines.

The 25-18 vote came after three days of debate in which State Sen. Tom White of Omaha, the bill's sponsor, argued it wasn't fair to impose taxes on the increased utility fees prompted by an unfunded federal mandate.

Despite the vote, final passage of the measure is in doubt.

Twenty-five votes are the minimum needed to pass a bill, and it was clear that at least a couple of the “yes” votes were just for first-round advancement, not for ultimate approval of the idea.

White, a Democratic candidate for Congress in Omaha's 2nd District, admitted he had work to do if he hoped to get his bill approved.

“In legislation as in life, the first rule is to live another day,” he said.

The City of Omaha opposes White's bill, saying the loss of sales tax revenue could force a property tax increase. Several senators said the state, with its budget woes, would be hard-pressed to do without its share of the expected sales tax revenue, estimated at $325 million over 20 years.

The City of Omaha is upgrading its sewer system, separating lines that carry storm water and sanitary sewage, to comply with an order from the federal government to decrease releases of raw sewage into the Missouri River.

While the streets are torn up for the city's sewer lines, the Metropolitan Utilities District plans to replace aging and obsolete pipes that carry drinking water and natural gas.

White argued that if financing costs are accounted for, the bill will be almost double the $2.6 billion, and Omaha-area residents will end up paying $325 million in additional sales taxes over the next 20 years.

“Don't compound our misery,” White said. “Refrain from taxing us as we try to deal with the federal government.”

State Sen. Steve Lathrop of Omaha compared the tax to “finding a wallet” on a street. Lathrop said it was wrong to keep the money in the wallet — which he said was the “windfall” of sales taxes to be reaped by the state and city.

Opponents to the tax-break measure, Legislative Bill 952, said the state could not afford to do without the expected sales tax revenue as it struggles to balance its budget.

“If we support this, cuts will have to be made,” said State Sen. Deb Fischer of Valentine.

Omaha Sen. Gwen Howard, a co-sponsor of White's bill, said she struggled with the prospect of a property tax hike, though she eventually voted to advance the bill.

Other Omaha senators, including Brenda Council and Brad Ashford, said it would be fairer for the city to impose a property tax increase to finance its operations than to use the sales taxes.

Poor and elderly people, they said, would be hard-pressed to afford an additional $50 a month, the estimated extra cost for the sewer, water and natural gas work.

If the expense was shifted to property tax, it wouldn't affect them as much: The elderly get homestead tax exemptions that lower their property tax bills and low-income renters would not be forced to pay the taxes on utility fees.

Gov. Dave Heineman, who must sign bills into law, has not stated an opinion on LB 952. He said Wednesday he was withholding an opinion until the bill reaches his desk.

Contact the writer:

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

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