Ricketts and lawmaker pledge to use excess income to cut taxes

LINCOLN, Neb. (AP) – Nebraska Gov. Pete Ricketts and a key legislative leader on Thursday pledged to cut taxes with the $ 412 million in excess revenue the state has collected over the past year.

Ricketts and State Senator Lou Ann Linehan, another Republican, said they continue to see income and property tax cuts as one of their top priorities in the 2022 session.

Linehan, who heads the Legislative Assembly’s revenue committee focused on taxes, said she expects a push this year to continue lowering Nebraska’s corporate tax rate, as lawmakers do. did last year. She said lawmakers would also try to lower personal tax rates and speed up implementation of a Social Security tax exemption that is expected to take effect in 2030.

“We have to give the money back to the people of Nebraska,” Ricketts said at a press conference with members of the revenue committee. “It’s not our money. It’s not my money, it’s not a legislator’s money, it’s the money that belongs to the people of Nebraska.

Rickett said the budget he would present to state lawmakers next week would contain “significant leeway for tax relief.”

Nebraska lawmakers last year reduced the state’s corporation tax from 7.81% to 7.25%, which cost the state an estimated $ 26 million in lost revenue. ‘by fiscal year 2025. Opponents have criticized the measures as a taxpayer-funded giveaway to corporations that don’t need them, in a state with the lowest unemployment rate in the country.

Supporters said the change would bring the corporate tax rate closer to the rate paid by small businesses, which are often configured to pay taxes as individuals rather than as corporations. The highest personal tax rate in Nebraska is 6.84%, although many residents pay a lower rate because of tax credits, deductions, and exemptions.

Nebraska is bursting with cash this year thanks to higher-than-expected tax collections over the past year, largely driven by an economy that fared better than expected during the pandemic. The state also received $ 1.04 billion in pandemic assistance from the federal government.

Linehan said it was “morally unacceptable” for the state to hold onto its $ 412 million surplus at a time when the Nebraska emergency fund, known as the cash reserve, holds 997, $ 5 million.

“We have significant funding beyond our needs,” she said.

Even so, lawmakers are likely to have disagreements over which taxes to cut. Other senators may want to use the money for other priorities, such as mental health services or additional state aid for K-12 public schools.

The state collects income, sales and miscellaneous taxes, but local governments depend on property taxes and many homeowners have seen these bills rise sharply over the past decade. Business groups hope to see income tax cuts, while agricultural advocates want to cut property taxes.

The OpenSky Policy Institute, a Nebraska tax policy think tank that has criticized previous income tax reduction proposals, argued in a statement that the tax cuts could affect future budget priorities such as as schools and roads.

“It is a fact that the Nebraska economy is currently being supported by an influx of federal dollars and we therefore urge lawmakers to be extremely careful,” said Rebecca Firestone, executive director of the group.

Ricketts will set out his priorities and budget proposals in more detail next Thursday during his annual State of State Address, his last before he leaves office in January 2023.


Follow Grant Schulte on Twitter: https://twitter.com/GrantSchulte

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