Lawmakers dealing with the budget soon

Last week the Legislature finished its 63rd day of the 90-Day session. With only 27 days left in the session, we will be dealing with the budget soon.

Last Friday a motion to place Legislative Bill 385 on General File -- a controversial bill introduced by Sen. Pahls that had been killed in the Revenue Committee -- was debated on the floor. The bill would have put in place sunset provisions to expire all sales tax exemptions and the sales tax itself in order to force the Legislature to review all of the exemptions. This week I would like to discuss this bill and other related ideas.

The bill was designed to enact one of the recommendations of the Nebraska Tax Policy Commission, which issued its final report on Nov. 15, 2007. The commission consisted of legislators, state administrators and public sector representatives.

LB 385 would have set up a series of sunset dates every year for the expiration of all sales tax exemptions and the sales tax starting in 2011 to 2016. The first sunset of the series would have been for all sales tax exemptions prior to 2005, with the third sunset of the series as an exemption to this. The second sunset would have been any sales tax exemption that was enacted or amended since 2005 or if the exemption is listed in a section of law amended since 2005. The third sunset provision would have been a sales tax exemption on motor vehicle rebates and a sales tax on services. A fourth sunset would have allowed cities the authority to enact up to one and a half cents of local sales tax. The fifth sunset would have been a sales tax on storage, use, lease, and rental of taxable items. And the last sunset would be a states sales tax.

This bill conveyed an interesting discussion on the floor during its short attempt to be placed on general file. This type of new tax policy is something Nebraska hasn't seen and if it had gotten to general file it would have been a good opportunity to discuss the state's tax system. It is a simple and visible method for taxing Nebraskans, every time you purchase an item you will see the tax that you pay. In addition, this bill included a broad tax base that would have required everyone to pay something and with the income tax gone it would have encouraged savings.

A few problems that I observed and that were brought up during the debate of this bill are how border bleeding would be addressed and the taxing on essentials such as, food, medical, and not-for-profit. My suggestions would be to require a personal property tax be placed on any item purchased out of state or give the individual the option to pay the state sales tax.

In conclusion I would like to mention that this was a very good discussion amongst the body and I would have enjoyed hearing more on LB 385 this session. I would enjoy hearing the thoughts and opinions of my constituents on future Nebraska tax policy.