Nebraska Legislature's plan to roll back $71 million in tax incentives moves forward

LINCOLN — Nebraska lawmakers gave an early green light to a bill that would reverse various tax incentives passed in recent years, which is estimated to add about $71 million in revenue to a tight state budget. The Nebraska Legislature advanced Legislative Bill 650 in a 36-2 vote Friday, pushing it through the first of three rounds of floor debate. The bill is a key part of Gov.

Jim Pillen's plan to balance the upcoming biennial state budget, which is facing a projected $289 million deficit. State Sen. Brad von Gillern of the Omaha area, who introduced LB650 on Pillen's behalf, said the governor originally proposed roughly $141 million in rollbacks, and the Revenue Committee cut that down to $71 million.



Von Gillern estimated that the additional revenues in the bill would fill roughly 25% of the predicted shortfall. "When we face a budget deficit at home, we can either find ways to bring in more income or cut our expenses," von Gillern said. A dozen different incentive programs are slated to be paired back or fully repealed under LB650, including Nebraska's biodiesel tax credit, tax credits for donations to food banks and sales tax exemptions for internet access towers.

Von Gillern said the committee prioritized cutting newly passed programs, some of which have yet to take effect. Sen. Terrell McKinney of Omaha questioned how von Gillern knew rolling back these incentive programs would yield $71 million in revenues when some of the programs haven't had time to operate.

Though von Gillern wasn't able to provide a specific breakdown of the revenues associated with each program, he said he would have more information by the second round of floor debate. Sen. Kathleen Kauth of Omaha explained that even though these programs are new, they still eat up general fund dollars in the upcoming budget, and reversing them would allow the Legislature to hold onto those funds.

Von Gillern and other LB650 supporters began the morning urging other Republicans to "be courageous" and "man up" in anticipation of possible opposition. By the end of the three-hour debate, however, opposition from Republicans was minimal. The closest was freshman Sen.

Robert Hallstrom of Syracuse, who reflected that on the campaign trail, Nebraskans appeared universally supportive of property tax relief, but had mixed feelings about shifting other taxes to do so. Hallstrom still voted for LB650. "(Voters) weren't particularly interested in raising one tax to lower another," Hallstrom said.

"They didn't want us to just reshuffle the deck chairs, if you will." A few Democrat lawmakers did speak out against LB650. While von Gillern said he didn't view LB650 as a tax increase, Sen.

Danielle Conrad of Lincoln refuted that it was indisputably one. "No matter what verbal gymnastics you try to utilize or assuage your principles or guilt in pushing those forward, it is a tax increase," Conrad said. "Otherwise it wouldn't show a $70 million increase in revenue on the fiscal note.

" McKinney and fellow Omaha Sen. Ashlei Spivey proposed alternative ideas to raise revenues to bolster the budget in place of LB650, such as halting construction of a new state penitentiary or re-appropriating funds for the Perkins County Canal. Neither idea saw much support on the floor.

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