LINCOLN — Taxpayers might be looking at more than $90 million in new taxes on things like admission to school sporting events and payments for college dorm rooms, memberships to the YMCA and the Henry Doorly Zoo, as well as purchases of art and autos for museums.
Those were among the tax exemptions eyed for repeal by members of the Nebraska Legislature’s Revenue Committee during a meeting Monday.
By broadening the state’s sales tax base, new revenue could be used to lower tax rates. But the committee was split over whether to lower the state sales tax rate or local property taxes — which one senator called “the marquee issue” in the state.
State Sen. Lou Ann Linehan of Elkhorn, who chairs the eight-member committee, spoke Monday in support of using the new revenue to reduce the state’s sales tax rate, currently 5.5%, and any leftover funds to reduce property taxes.
It would be a change of focus for the committee after a bill pushed by Linehan, which would have raised the sales tax and repealed some exemptions to reduce property taxes, failed to pass this spring. Pushback from Gov. Pete Ricketts helped sink the proposal. The conservative Republican said that it didn’t make sense to raise taxes to lower taxes and that taxing things like pop and candy amounted to a ”reverse Robin Hood.”
Linehan’s new approach would not raise tax rates but would remove tax exemptions, which would increase tax revenues by millions of dollars so that the sales tax rate could be lowered.
“We gotta do something that the governor will support,” she said.
Not everyone on the committee agrees that lowering the sales tax rate is a priority. The No. 1 issue for farmers has been reducing property taxes, while business groups are seeking reductions in state income taxes.
Sen. Tom Briese of Albion, a farmer, said any new tax revenue should be used to reduce property taxes.
“We have to broaden the sales tax base to generate revenue for property tax relief,” Briese said. “That is the marquee issue in this state.”
Members of the Revenue Committee met Monday morning as part of an interim study on whether sales tax exemptions should be repealed. The committee’s final recommendations won’t come out until the end of the year.
Senators went line by line through an annual state report that lists the items that are exempt from sales taxes, and how much revenue is being foregone.
Currently, about 117 types of purchases are exempt from sales taxes, according to the 2018 report. They include some biggies like agricultural machinery and fertilizer ($203 million and $154 million a year, respectively), manufacturing components/ingredients ($1.6 billion) and groceries ($166 million).
There are also some relatively tiny exemptions, like that on bull semen ($661,000), mineral oil to suppress dust in grain bins ($455,000) and animal grooming ($254,000).
As the senators went through the list, they voted on which sales tax exemptions they could, at this time, support repealing. The ones that drew support to repeal included:
Rental of dorm rooms at colleges, and rooms that are rented to family members at assisted living centers, hospitals and other licensed medical facilities ($70.7 million a year).
Newspaper subscriptions ($3.2 million).
Prepared food sold by schools ($8.9 million).
Admission or membership at a Nebraska zoo, such as Henry Doorly ($1.8 million).
Admission in organizations dedicated to healthy living and youth development, such as the YMCA ($3.5 million).
Admission to school events ($591,000).
Admission and food at political fundraisers (not estimated by the state).
The new exemptions targeted are on top of the repeal of exemptions on pop, candy and bottled water that were included in the failed bill this spring.
Linehan said one criticism of property tax relief proposals this spring was that the committee was picking “winners and losers” in selecting which sales tax exemptions to repeal. So, she said, the committee is broadening the scope of the targeted exemptions, and pairing them with a plan to reduce the overall sales tax rate.
Sen. Curt Friesen of Henderson said that with a sales tax hike off the table, the new approach should get more support. But he worried that with 2020 being an election year, passing a major tax reform bill would be difficult.
Also discussed on Monday was taking another look at the Build Nebraska Act. The measure, passed in 2011, earmarks ¼ cent of state sales taxes to new highway construction.
Linehan said it just makes sense to review whether that revenue — about $70 million a year — is still needed for roads, or could be used for tax relief.
District 1: State Sen. Julie Slama
From: Peru
Party: Republican
District 2: State Sen. Robert Clements
From: Elmwood
Party: Republican
District 3: State Sen. Carol Blood
From: Bellevue
Party: Democratic
District 4: State Sen. Robert Hilkemann
From: Omaha
Party: Republican
District 5: State Sen. Mike McDonnell
From: Omaha
Party: Democratic
District 6: State Sen. Machaela Cavanaugh
From: Omaha
Party: Democratic
District 7: State Sen. Tony Vargas
From: Omaha
Party: Democratic
District 8: State Sen. Megan Hunt
From: Omaha
Party: Democratic
District 9: State Sen. Sara Howard
From: Omaha
Party: Democratic
District 10: State Sen. Wendy DeBoer
From: Bennington
Party: Democratic
District 11: State Sen. Ernie Chambers
From: Omaha
Party: Independent
District 12: State Sen. Steve Lathrop
From: Omaha
Party: Democratic
District 13: State Sen. Justin Wayne
From: Omaha
Party: Democratic
District 14: State Sen. John Arch
From: La Vista
Party: Republican
District 15: State Sen. Lynne Walz
From: Fremont
Party: Democratic
District 16: State Sen. Ben Hansen
From: Blair
Party: Republican
District 17: State Sen. Joni Albrecht
From: Thurston
Party: Republican
District 18: State Sen. Brett Lindstrom
From: Omaha
Party: Republican
District 19: State Sen. Jim Scheer
From: Norfolk
Party: Republican
District 20: State Sen. John McCollister
From: Omaha
Party: Republican
District 21: State Sen. Mike Hilgers
From: Lincoln
Party: Republican
District 22: State Sen. Mike Moser
From: Columbus
Party: Republican
District 23: State Sen. Bruce Bostelman
From: Brainard
Party: Republican
District 24: State Sen. Mark Kolterman
From: Seward
Party: Republican
District 25: State Sen. Suzanne Geist
From: Lincoln
Party: Republican
District 26: State Sen. Matt Hansen
From: Lincoln
Party: Democratic
District 27: State Sen. Anna Wishart
From: Lincoln
Party: Democratic
District 28: State Sen. Patty Pansing Brooks
From: Lincoln
Party: Democratic
District 29: State Sen. Kate Bolz
From: Lincoln
Party: Democratic
District 30: State Sen. Myron Dorn
From: Adams
Party: Republican
District 31: State Sen. Rick Kolowski
From: Omaha
Party: Democratic
District 32: State Sen. Tom Brandt
From: Plymouth
Party: Republican
District 33: State Sen. Steve Halloran
From: Hastings
Party: Republican
District 34: State Sen. Curt Friesen
From: Henderson
Party: Republican
District 35: State Sen. Dan Quick
From: Grand Island
Party: Democratic
District 36: State Sen. Matt Williams
From: Gothenburg
Party: Republican
District 37: State Sen. John Lowe
From: Kearney
Party: Republican
District 38: State Sen. Dave Murman
From: Glenvil
Party: Republican
District 39: State Sen. Lou Ann Linehan
From: Elkhorn
Party: Republican
District 40: State Sen. Tim Gragert
From: Creighton
Party: Republican
District 41: State Sen. Tom Briese
From: Albion
Party: Republican
District 42: State Sen. Mike Groene
From: North Platte
Party: Republican
District 43: State Sen. Tom Brewer
From: Gordon
Party: Republican
District 44: State Sen. Dan Hughes
From: Venango
Party: Republican
District 45: State Sen. Sue Crawford
From: Bellevue
Party: Democratic
District 46: State Sen. Adam Morfeld
From: Lincoln
Party: Democratic
District 47: State Sen. Steve Erdman
From: Bayard
Party: Republican
District 48: State Sen. John Stinner
From: Gering
Party: Republican
District 49: State Sen. Andrew La Grone
From: Gretna
Party: Republican
Nebraska has 49 state senators in the Legislature. Click through to find your state senator and others.
District 1: State Sen. Julie Slama
From: Peru
Party: Republican
District 2: State Sen. Robert Clements
From: Elmwood
Party: Republican
District 3: State Sen. Carol Blood
From: Bellevue
Party: Democratic
District 4: State Sen. Robert Hilkemann
From: Omaha
Party: Republican
District 5: State Sen. Mike McDonnell
From: Omaha
Party: Democratic
District 6: State Sen. Machaela Cavanaugh
From: Omaha
Party: Democratic
District 7: State Sen. Tony Vargas
From: Omaha
Party: Democratic
District 8: State Sen. Megan Hunt
From: Omaha
Party: Democratic
District 9: State Sen. Sara Howard
From: Omaha
Party: Democratic
District 10: State Sen. Wendy DeBoer
From: Bennington
Party: Democratic
District 11: State Sen. Ernie Chambers
From: Omaha
Party: Independent
District 12: State Sen. Steve Lathrop
From: Omaha
Party: Democratic
District 13: State Sen. Justin Wayne
From: Omaha
Party: Democratic
District 14: State Sen. John Arch
From: La Vista
Party: Republican
District 15: State Sen. Lynne Walz
From: Fremont
Party: Democratic
District 16: State Sen. Ben Hansen
From: Blair
Party: Republican
District 17: State Sen. Joni Albrecht
From: Thurston
Party: Republican
District 18: State Sen. Brett Lindstrom
From: Omaha
Party: Republican
District 19: State Sen. Jim Scheer
From: Norfolk
Party: Republican
District 20: State Sen. John McCollister
From: Omaha
Party: Republican
District 21: State Sen. Mike Hilgers
From: Lincoln
Party: Republican
District 22: State Sen. Mike Moser
From: Columbus
Party: Republican
District 23: State Sen. Bruce Bostelman
From: Brainard
Party: Republican
District 24: State Sen. Mark Kolterman
From: Seward
Party: Republican
District 25: State Sen. Suzanne Geist
From: Lincoln
Party: Republican
District 26: State Sen. Matt Hansen
From: Lincoln
Party: Democratic
District 27: State Sen. Anna Wishart
From: Lincoln
Party: Democratic
District 28: State Sen. Patty Pansing Brooks
From: Lincoln
Party: Democratic
District 29: State Sen. Kate Bolz
From: Lincoln
Party: Democratic
District 30: State Sen. Myron Dorn
From: Adams
Party: Republican
District 31: State Sen. Rick Kolowski
From: Omaha
Party: Democratic
District 32: State Sen. Tom Brandt
From: Plymouth
Party: Republican
District 33: State Sen. Steve Halloran
From: Hastings
Party: Republican
District 34: State Sen. Curt Friesen
From: Henderson
Party: Republican
District 35: State Sen. Dan Quick
From: Grand Island
Party: Democratic
District 36: State Sen. Matt Williams
From: Gothenburg
Party: Republican
District 37: State Sen. John Lowe
From: Kearney
Party: Republican
District 38: State Sen. Dave Murman
From: Glenvil
Party: Republican
District 39: State Sen. Lou Ann Linehan
From: Elkhorn
Party: Republican
District 40: State Sen. Tim Gragert
From: Creighton
Party: Republican
District 41: State Sen. Tom Briese
From: Albion
Party: Republican
District 42: State Sen. Mike Groene
From: North Platte
Party: Republican
District 43: State Sen. Tom Brewer
From: Gordon
Party: Republican
District 44: State Sen. Dan Hughes
From: Venango
Party: Republican
District 45: State Sen. Sue Crawford
From: Bellevue
Party: Democratic
District 46: State Sen. Adam Morfeld
From: Lincoln
Party: Democratic
District 47: State Sen. Steve Erdman
From: Bayard
Party: Republican
District 48: State Sen. John Stinner
From: Gering
Party: Republican
District 49: State Sen. Andrew La Grone
From: Gretna
Party: Republican
Nebraska has 49 state senators in the Legislature. Click through to find your state senator and others.