By GRANT SCHULTE
LINCOLN, Neb. (AP) - Nebraska farmers and business owners could get a property tax break under a bill advanced by lawmakers on Monday.
Senators gave first-round approval to an exemption for personal business property, despite criticism from some that lawmakers were taking a “whack-a-mole” approach with tax policies that benefit few people.
The measure would allow business owners to exempt the first $10,000 worth of tangible property used in their operations, for an average tax savings of $162. The bill would apply to farm equipment such as irrigation pivots and tractors, and business equipment such as rail cars, pipelines and factory machines.
Lawmakers advanced the measure on a 29-0 vote, after reducing the size of the exemption so it wouldn’t consume such a large share of the budget. The watered-down version would cost the state $19.6 million a year.
“It’s a start in the right direction,” the bill’s sponsor, Sen. Mike Gloor of Grand Island, said. “We’ll see how this works. If it’s a successful program and those dollars are helpful to businesses, we can always add more.”
Some senators said they supported the measure, but argued the Legislature hasn’t done enough this year to pass broad-based tax cuts.
“Our efforts this year seem to be reactive and short-sighted,” said Sen. John McCollister of Omaha. “Reducing taxes is a good thing, but our effort in this regard should be purposeful and fit into a long-term strategy.”
McCollister said lawmakers keep approving tax exemptions for specific goods and services, which he referred to as a “whack-a-mole” tax policy. He said that makes it more difficult to cut taxes for all residents.
Gloor, who is chairman of the Revenue Committee, said lawmakers have followed a long-term approach to incrementally cut taxes each year. He said he introduced the bill in response to 2013 research from the Legislature’s Tax Modernization Committee, which found that most of Nebraska’s neighboring states have passed laws to chip away at personal property taxes.
Nebraska school districts along with counties and other local governments collected nearly $218 million in personal property taxes last year out of the $3.5 billion that was paid on all property.
Gloor pointed to other tax reforms advanced this year, including an extra $60 million a year in the budget to offset property taxes. That amount could grow by another $4 million if lawmakers follow the recommendations of the Appropriations Committee.
If those budget items and Gloor’s bill win approval, Nebraska property owners would see a collective $224 million tax reduction.
Sen. Al Davis of Hyannis said the legislation doesn’t fully address the challenges facing farmers and ranchers, who may have to pay taxes on $500,000 worth of agricultural equipment. Davis said the state’s rural property tax struggles are largely driven by the lack of state equalization aid for rural K-12 schools.
“We need to address the ag problem, and we haven’t done it,” Davis said. “It’s got to be fixed at some point. We can’t kick the can down the road very much longer.”
Sen. Dan Hughes of Venango said the bill represents a “baby step” toward lowering taxes, but doesn’t go far enough. Hughes, a farmer and small business owner, said the measure would net him a tax savings of a little more than $100.
“This is a pittance,” Hughes said. “This is not much money in the pockets of the industry that drives this state.”