NTF worksheet: legwatch178.doc. 5-19.
NEBRASKA TAXPAYERS FOR FREEDOM TESTIMONY ON LB 289: APRIL 24, 2019.
Good afternoon. Doug Kagan representing NE Taxpayers for Freedom. We believe that LB 289 features many negative elements for taxpayers but only miniscule positive elements. A huge boost in state spending on K-12 schools, however, no locked-in requirement for school districts to cut waste or rein in their property taxes, which account for about 55%-60% of a total property tax bill. The increase in the state sales tax would hit especially hard consumers in urban areas who also pay local sales tax, a total of 7.75% in Omaha. A hike in the documentary stamp tax in real estate transactions. If you buy a $200,000 house today, you pay $450 in documentary tax. LB 289 would double this tax to $900! Not good news for home buyers or the real estate industry. Initially levying sales tax on a few services subsequently will lead to expansion of this tax to other services. Apparently to win support among Omaha senators, LB 289 boosters included a tax limit exception that would allow the Omaha Public Schools to raise its property tax levy to accrue approximately $12 million more annually to help fill a $771+ million gap in its mismanaged pension system. OPS could raise property taxes, 6c per $100 of valuation, without a vote by residents. On a $200,000 house, $120 more, a tax hike that would last decades. The bill would lower valuation of farm and ranch land from 75% of market value for property tax purposes to 65% and residential property from 92%-100% of market value to 90%. However, local taxing entities simply could raise their property tax levies to increase revenue. The bill places a cap on property tax spending increases based on the consumer price index plus real growth in the state economy, however, there already exist several spending lid exceptions transforming lids into Swiss Cheese lids, and future legislatures conveniently could blast off the cap. Most current state property tax credits given property owners would disappear. Worst of all, bill sponsors did not even attempt to include budget cuts to trim waste and redundancies, actions that could have provided millions for property tax relief.
This bill resembles the infamous 3-shell game, tasking taxpayers to select the shell under which the property tax relief pea lies. Limping into this hearing without full support by this committee, LB 289 already appears on life support. We urge the committee to give it a graceful demise. Thank you.
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THE HEARING.
Jack Holmes, representing Rural Community Schools: Would like Legislature to fund 33% of school basic needs.
Stephen Grizzell, Fairbury Pub. Schools: Too much reliance on property tax for schools. Would like 24%, not 8%, increase in state aid to schools. Drastic slowing in school spending because of property tax situation. Admitted that using general fund $$ for building costs less in property taxes than bond issues.
Barbara Griffith: Legislature has reduced spending on education. She does not pay property taxes. Tax junk foods high in salt and sugar. More people die from a poor diet than from smoking.
Art Niefelt: Farms on the Kansas border. Needs property tax relief and suggests state aid to all NE school districts. Property tax consumes half his income and doubled in 9 years. Farmers living near cities pay even higher property taxes. Kansas farmers pay less property tax.
Ralston Mayor Kindig: Ralston would lose too much revenue from this bill. His city receives little state aid.
Andy Rikli, Papillion Pub. Schools: The state aid equalization formula is bad. District would lose $3 million in state aid under LB 289. There is popular support in NE cities for bond issues. His district spending was 3.59% higher over the last 3 yrs. annually. His staff salaries are costly. Costly to educate immigrant kids and special ed kids. District health insurance costs are rising, several million in his budget. District has 920 teachers and 20-30 new ones every year in his growing district.
Matt Innen, electrical contractor: It will be tougher on homeowners to pay the sales tax on plumbing, heating, and air conditioning work. The bill would hurt jobs and hiring. LB 289 would increase the instances of homeowners doing their own interior work badly and unsafely.
Joe Murray: Change valuation of rural property to its production capacity. Too much government growth.
Blaine Wilcoxson, Waldinger Corp.: Represented mechanical contractors association & builders association. Services included in sales tax expansion are not luxury services and need to be affordable. Bill would raise the price of products and cause a financial nightmare. 20% of this work is repair and maintenance, to be taxed, but other work would not be taxed, therefore difficult to figure out what work would face taxation.
Tax Foundation rep: Including only a few services in a sales tax expansion will cause those services facing taxation to declare that their services are a necessity and should not face taxation. Suggested eliminating all sales tax exemptions at one time, to not pick winners and losers. Cigarette tax revenue is declining in states. NE currently is the 27th highest sales tax state; the bill would make us the 17th highest. If this bill passes, NE will not rank lower in overall taxation. NE would continue to have high income and property taxes.
Self-storage owner: Owners like him will pass along increased costs to renters. LB 289 is a burden on working families.
Lincoln Public School rep: A new revenue stream for her district will be required if bill passes, because this district would lose state aid under the bill. Concerned about the inflation rate and a growing district that requires more funding.
Farmer & school board member: His school district would lose much state aid. His district would benefit from more state equalization aid. Bill would not lower property taxes sufficiently. Should lower ag valuation to 50%.
Only 4 people supported LB 289 at this hearing! 49 people opposed the bill. Lobby your state senator TODAY to vote NO on LB 289.