Neb. Legislature advances bill to study tax system

LINCOLN, Neb. (AP) -- An effort to take a fresh look at Nebraska tax policies left largely unchanged for decades advanced Wednesday in the Legislature after lawmakers voted down one senator's brief filibuster, pushing the proposed study closer to final approval.

Under the plan by Sen. Paul Schumacher, R-Columbus, the state would establish a Tax Modernization Committee to recommend changes to state and local policies he argues are outdated. Should the bill pass, the committee would be required to offer recommendations by December.

The Legislature advanced it 47-1, sending it on to the next round of voting.

Gov. Dave Heineman started the conversation on tax reform when he asked the Legislature to consider two bills that would eliminate Nebraska's income tax, or at least reduce what taxes retirees pay. Heineman withdrew his proposals after both measures faced opposition from farm groups, manufacturers, hospitals and other groups that benefited from specific sales-tax exemptions. He then encouraged the Legislature to study tax reform.

Members of the Legislature's Revenue Committee and other committee heads would sit on the panel until the end of 2015. Lawmakers can reauthorize the panel if needed, but many are hoping to debate tax reform legislation starting next year.

The panel would review Heineman's suggestions and all other tax reform options. Top tax complaints include too high of property taxes, occupation taxes and taxation on retirees. This session, several state senators have asked for their bills on tax changes to be folded into the tax commission study.

Revenue Committee Chair Sen. Galen Hadley of Kearney said the goal of the tax study is to find the best tax system for Nebraska. He reminded lawmakers that the goal of the study is not to reduce taxes.

Taxpayers would need to ask their local government and schools to cut spending if they want lower taxes, he said. Instead, Hadley said lawmakers would search for tax reforms that would be equitable, fair and compete with other states.

"I don't think people mind paying taxes, but they want to have a fair shake," Hadley said. "They want to feel what they are paying is basically equitable to what their neighbors are paying."

Omaha Sen. Ernie Chambers mounted a filibuster on the bill in an attempt to kill it because he was angry lawmakers didn't advance one of his bills. Since Friday, Chambers has incrementally changed words to re-craft the bill, which he says is poorly written.

Right before Schumacher moved to end the filibuster Wednesday, Chambers asked lawmakers to table the bill and let him rewrite it. He said senators are ending the first round of debate prematurely because they're tired and weak-kneed. Chambers said if senators voted to end debate, he would consider that motion a challenge.

"If you want to cut it off, you have the votes to do it," he said. "But that will not be the end of me."

__

The bill is LB613