The only agreement seemed to be to put the proposal to a vote. Governor Heineman, and his critics, don't want the idea of radically changing the tax system to linger, and create uncertainty to businesses and other organizations either in-state or considering a move here.
Despite originally announcing a "neutral" position on the tax proposals, the spokesman for the Nebraska Chamber of Commerce and Industry, John Cederberg, asked for Legislative Bill 405, the proposal to eliminate state income taxes, to be voted down quickly.
"We don't want LB 405 hanging over our heads. This one is not good." said Cederberg. He recommended Heineman's alternative, less aggressive bill, which drops taxes on seniors and retirement income, but retains most of the exemptions in sales tax that currently exist for business, agriculture, and charitable organizations.
One concern is the potential drop in revenue, which was suggested by the fiscal note on LB 405. Legislative analysts are estimating a $340 million shortfall in the 2016-2017 budget year. The Nebraska Department of Revenue estimates the shortfall at $171 million for that year.
"We're taking a big risk here. I need a sense of comfort that, if we do this it will pay off." was the comment from State Senator Burke Harr of Omaha.
"It's a significant risk not to change." was Heineman's response. He views the criticism as political interests of groups who would lose their exemptions to the sales tax, the main revenue stream under LB 405. His plan eliminates income taxes, in order to help retain senior citizens (who migrate from Nebraska as they start collecting retirement payments taxed at the income tax levels); younger entry-level workers, like college students in their first job; and military families. It relies on more citizens and businesses paying sales taxes to offset potential losses in the long run.
Other "neutral" groups also did not support LB 405, but suggested on-going discussion about the tax system. This included, among others, the Nebraska State Education Association, which has battled with Heineman over education in the past.
Earlier in the week, Lozier, a large manufacturer of office equipment, said they would consider relocation based on their preliminary understanding of the bill, and the increase in sales taxes it would cost them. At the hearing, Richard Reiser from Werner Trucking, spoke on the record, reminding the committee of their move to Sarpy County in Nebraska when, in 1976 Iowa eliminated a tax exemption on purchasing trucking equipment. They now employ 1,400 employees in Nebraska and run 7,300 trucks in cross-country transportation.
While Reiser said Heineman's proposal would add "millions" in new tax liabilities, the question becomes what would happen next, since Iowa's taxes are already in place? Also, Iowa has a "use tax" in their system, charging tax on anything purchased out of state to do business in the state. It is one thing to move business across the river, but how far might a company move to avoid these taxes that are paid only when they are successfully doing business?
The Nebraska VFW sided with Heineman, recognizing the potential savings for service members and veterans if income taxes are eliminated.
Finally, in Nebraska, the voice that is heard over much of the usual political dialogue is Omaha's Senator Ernie Chambers, recently returned to the Unicameral after a forced hiatus due to term limits. Chambers, in the past, attempted to sue God in court. Chambers expressed his opinions unequivocally, suggesting the Governor is trying to pull a joke on everyone.
"Do you think he would offer something like this seriously, with no facts, no data?" he asked.
If the plan moves from committee to the full floor, he will oppose it, and has shown in the past a strong mastery of the rules and procedures to hold up legislation that does not work with his agenda. So the road ahead is certainly challenging and difficult, but everyone seems to agree to some resolution before this session ends.
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