Some called it a beat down. One lobbyist called it a bloodbath.
Whatever you want to call it, Gov. Dave Heineman’s proposal to swap state taxes — more sales taxes for no state income taxes — took a beating during two days of public hearings this week.
The only reason the bills aren’t dead now is because they were being brought by the governor.
A couple of years ago, Omaha State Sen. Rich Pahls floated a similar plan, though it would eliminate all sales tax exemptions (instead of half as proposed by the governor).
It provoked a similar firing squad of lobbyists, farmers, nonprofit groups and business owners, who claimed it would kill their livelihoods to pay sales tax on exempt stuff like energy, seed, manufacturing materials and equipment. That bill, as I recall, might have been killed in the same day.
But this time, it’s the governor pitching this idea, not a mid-level state senator.
Just about everyone agrees that sales tax exemptions have grown out of whack. More sales are exempt now than taxed. Some businesses get breaks; others don’t. It raises real questions of fairness in a world where most folks think taxes are too high.
But the governor’s approach to this is getting a lot of criticism. He kept his plans secret, didn’t involve the major interest groups and state senators, and didn’t even reveal the details until after his State of the State address.
Now he and the sponsors of his two bills, Sens. Beau McCoy and Brad Ashford, want the Legislature to jump aboard, launch a comprehensive “working group” study of the extremely complex issue, and come up with a sellable plan by April 1.
I’ve seen the Legislature several times rise to the challenge, and work out tough compromises in an amazingly short period of time. But it usually takes a crisis to inspire that.
The governor says there is a crisis: Nebraskans are losing kids and seniors because of our “mediocre” tax policies. But a lot of interest groups and senators aren’t feeling the urgency, and are wondering if a more deliberate examination of tax changes is needed.
Expect the Revenue Committee to give us some answers next week.