LINCOLN — The Nebraska Farm Bureau Federation has thrown its support behind Gov. Pete Ricketts’ property and income tax plan.
The group’s endorsement of Legislative Bill 947 gives a major boost to the plan’s chances in the Nebraska Legislature. The first round of debate on the bill is expected to start this week.
But Farm Bureau President Steve Nelson said Saturday that the group will continue to pursue a petition drive aimed at providing Nebraska property owners with $1.1 billion worth of tax savings.
“We have an opportunity in the Legislature to provide meaningful property tax relief, but if the Legislature is not able to pass it, the only option is the petition,” he said.
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State Sen. Jim Smith of Papillion, who introduced the bill and chairs the Revenue Committee, welcomed the group’s support.
“I’m happy they are part of the coalition,” he said. “They are important to our success.”
As advanced, LB 947 would provide homeowners and agricultural landowners with new, refundable income tax credits to offset some of their property taxes.
The credits would be phased in over 12 years and would be worth an estimated $590 million by 2030, when they are fully implemented. At full implementation, the credits would equal 20 percent of property taxes paid.
The bill also would cut the top corporate income tax rate and boost workforce development funds by $5 million annually. The income tax change would be worth $50 million in 2030.
Nelson said the amount of property tax savings under the plan would be similar to the amount provided under the petition, which would provide income tax credits equal to about 30 percent of property taxes.
The latest version of LB 947 would provide the new credits in addition to the state’s existing $224 million property tax credit program and $20 million worth of personal property tax exemptions.
Nelson said the Farm Bureau testified in favor of several property tax measures this year.
The group decided late last week to back LB 947 because it was the only bill to get out of committee this year. He said several other agriculture groups also are supporting the plan, as are major business groups.
“Farm Bureau’s support will help build momentum to get major property tax relief done here in the final days of session,” Ricketts’ spokesman Taylor Gage said.
Whether the proposal has enough support to overcome an expected filibuster remains to be seen.
“That’s the question here,” Nelson said. “Can the bill get 33 votes (to end a filibuster)? We believe it can.”
One source of opposition comes from senators and groups concerned about the bill’s price tag.
As advanced, LB 947 would use about $40 million from the state’s cash reserve fund to pay for the tax changes during the current budget period. The bill would take the reserve fund down to an estimated $255 million by June 30, 2019.
The measure does not spell out how the state would manage the loss of tax revenue in future years.
Nelson said he expected that the costs could be paid for through growth.
“This is as close as we’ve been to meaningful property tax relief in a long time, and it would be unfortunate if we didn’t take advantage,” he said.
LB 947 would provide a refundable income tax credit for ag landowners starting at 2 percent of property taxes paid, then increasing until it reached 20 percent of property taxes paid by 2027.
The credit on homes would start at 1 percent of taxes paid, up to a cap of $25 the first year. The credit would grow to a maximum of 20 percent, or $500, by 2030.
As advanced, the bill also would cut the top corporate income tax rate to 6.84 percent, in five annual steps, and allocate $5 million a year for workforce development.