Gripes about Nebraska's motor vehicle taxes may pale in comparison to the outcry over property taxes.Â
But State Sen. Robert Hilkemann of Omaha heard plenty of complaints from patients at his podiatry practice who had recently moved to Nebraska and suffered sticker shock when they went to license their vehicles.Â
That's why he proposed LB82, which would cut motor vehicle taxes for most drivers.Â
"I'm not bringing this for any lobbying group," Hilkemann said Tuesday. "I'm bringing this for the 1.3 million drivers who pay this tax. We're very high on this tax."
As introduced, however, his bill would mean a $60 million a year revenue hit to schools, cities and counties, while pushing up state school aid costs by $25 million. The price tag brought objections from counties and cities.Â
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Testifying at a public hearing before the Transportation and Telecommunications Committee, Hilkemann said Nebraska ranks among the top five to 10 states in the cost of registering motor vehicles. He also said he has several problems with how the taxes are structured.
State law sets the base tax using the manufacturer's suggested retail price, a figure that federal law requires vehicle makers to put on every car, truck and SUV. The actual tax is calculated by applying a multiplier that starts at 100% in the first year, then decreases to zero for any vehicle 14 years old or more.
But Hilkemann said that, between promotional deals and negotiations, few people actually pay MSRP for new vehicles these days. A 2021 Chevrolet Blazer with a V6 engine and all-wheel drive could be labeled at $37,445 or more but sell for $35,195. So drivers end up paying motor vehicle taxes on an artificial value.
Next, the multiplier drops 10% a year for the first five years, which he argued does not reflect actual depreciation on a vehicle.Â
"I don’t know about you, but I haven’t owned a vehicle that depreciated only 10% in first year," Hilkemann said.
Meanwhile, no motor vehicle taxes are paid on more than 1 million vehicles in Nebraska because they have reached the 14-year mark, he said. Those older vehicles include mint-condition 1967 Chevy Camaros, as well as rusty, banged-up 1997 Dodge Dakotas. He said Nebraska is the only state in the region that does not have some minimum charge for all vehicles.Â
Hilkemann said he will be working to eliminate the cost of the bill. He said he thinks the tax structure could be improved and the bill be made revenue neutral by bringing down the tax costs on new vehicles and including minimum charges for older ones.Â
Jack Cheloha, a lobbyist for the city of Omaha, said he would be happy to look at alternatives. As introduced, however, he said LB82 would cost Omaha $1.5 million annually.
"That’s a significant dollar amount," he said.
MEET NEBRASKA'S STATE SENATORS