Sobering story

By now, you've heard many reports on how the Nebraska economy has suffered in the past three years. But, perhaps, no story has been as sobering as one told this morning at the meeting in McCook presented by the Nebraska Chamber of Commerce and Industry.

It deals with capital gains.

According to information shared by Barry Kennedy, president of the state chamber, two years ago Nebraskans claimed $3 billion (that's with a 'B') in capital gains on their income taxes. Last year, that total had plunged to just a little over $300 million.

The catastrophic decline, brought to Kennedy's attention by State Sen. Don Pederson of North Platte, illustrates why Nebraska state government has been scrambling to meet expenses and stay out of the red in the recent past ... especially since the terrorist attacks of Sept. 11, 2001.

"The capital losses will continue to affect us for years to come," said Sen. Tom Baker of Trenton, who joined the state chamber leader for the meeting at the Community Hospital meeting rooms.

Forty-five business and professional leaders from the McCook area gathered to hear the report from Kennedy and Baker.

The speakers' focus was the Nebraska sales tax changes which will take effect next Tuesday, Oct. 1. On that day -- only five days away -- Nebraskans will start paying an additional half-cent in state sales tax. That will raise their fee for state sales tax to 5.5 percent. This total is in addition to local and municipal taxes, such as the local one percent sales tax now in effect in McCook.

In addition, starting next Tuesday, another 30 cents per pack will be added to the tax on cigarettes, and an additional range of services will become liable for sales taxes in Nebraska for the first time. These services include the labor involved in (1) Cleaning and maintenance services; (2) Installation of equipment, such as car stereos and CD players; (3) Pest control services; (4) Security services; (5) Motor vehicle towing; (6) Motor vehicle painting; (7) Motor vehicle washing and waxing; and (8) A wide range of contracting tasks, such as home construction and delivery of materials.

The state chamber strenuously opposed the taxes on these services, saying the entire issue of taxable items should be addressed at one time, not just a part of it.

For his part, Sen. Baker said he opposed the tax on services, favoring instead a plan which would have placed a tax on snack foods.

But, of even more importance to Kennedy and Baker in future legislative sessions, is an effort to restructure Nebraska's entire tax system.

To help accomplish that task, Sen. Baker said he favors using tax legislation drafted by Sen. Kermit Brashears as a starting point. Brashears' bill would decrease the reliance on property taxes, which Baker views as an important step in redoing the tax system.

The state senator from Trenton and the state chamber president also talked about term limits, with both indicating they are developing reservations about the new law which limits state senators to two terms.

"I've talked with my colleagues in Michigan, and they tell me it has the effect of lessening the power of the legislative branch, and increasing the authority of the executive branch." Kennedy said.

Unless the term limits' law is repealed, if Baker is re-elected the next four-year term would be his last in the legislature. "After this, we would have have only two kinds of senators in Nebraska," Kennedy said: "Those serving their first term, and those serving their last term."

The meeting in McCook was one of 29 being hosted statewide by the Nebraska Chamber. After a glowing introduction from Marie Owen, the McCook Chamber's executive director, Kennedy joked that was better than the intros he usually received. "Usually, they just say, 'Here's the latest dope from Lincoln."

Sen. Baker was unusually attired for the meeting. Instead of the usual suit and tie he wears for business meetings, Baker was sporting a uniform for the Commemorative Air Force, the group which brought the vintage World War II aircraft to McCook. Baker, a long-time pilot, and his father, Ben, have been a member of the groups of airplane enthusiasts for a number of years and they both worked with Doug Vap to bring the bombers to McCook.

During questions at the end of the meeting, Baker said backers of the ethanol plant at Perry will be under a tight time schedule if they are to qualify for state ethanol incentives. "I support their efforts, but it's going to be tough to qualify," he said.