Nebraska lawmakers advanced a bill Wednesday that would continue an income tax credit program at a level high enough to offset about a quarter of school property taxes.
LB723 cleared first-round consideration on a 36-0 vote, but only after an amendment was added to keep the program from exploding in cost. The measure must clear two more rounds of debate to pass.Â
Sen. Lou Ann Linehan of Elkhorn, the Revenue Committee chairwoman, backed the amendment and the bill, which make changes to a program that allows property owners to claim refundable income tax credits equal to a portion of what they paid in school property taxes.Â
"It protects us against it getting a lot more and yet prevents us from going backward," she said.Â
As amended, LB723 would fix the size of the program at $548 million for the current year and at $560.7 million for 2023, then allow it to grow as new property is added to the tax rolls.Â
Sen. Tom Briese of Albion, who introduced the measure, said that without LB723, the program would shrink by about $200 million in 2025, which he said would amount to a property tax increase.Â
Listen now and subscribe: | | | |
Under current law, the total allocated for income tax credits is set at $375 million in 2025. That amount had appeared to be a lofty goal when the law was passed in 2020. In the years leading up to that goal, the law said the credit program would grow with the growth of tax revenue.
But pandemic-related postponement of income tax filing and an influx of federal pandemic relief dollars triggered higher-than-anticipated growth in the program. That pushed the amount allocated for credits to $548 million this year.
Estimates of continued strong revenue growth created the possibility that the program would grow to $700 million or more next year, a level that Sen. John Stinner of Gering, the Appropriations Committee chairman, warned could be unsustainable. He worked with Briese and Linehan to craft the amendment.
Some other senators raised objections to the program as a whole, saying that the tax credits were difficult for taxpayers and that the program does not improve Nebraska's standing in comparisons with other states.
Sen. John Cavanaugh of Omaha noted that the program does not actually reduce property tax bills or lower income tax rates.