In a heated session at the Nebraska Legislature on Wednesday, small-business owners expressed strong opposition to a proposed bill that aims to broaden the state’s sales tax base. The measure, introduced by Sen. Dave Murman on behalf of Gov. Jim Pillen, seeks to impose sales taxes on a wide range of services as part of an effort to reduce the state’s dependency on property taxes.
Gov. Pillen, who has consistently advocated for expanding sales taxes to alleviate property tax pressures, is behind LB 1244. The proposal has faced resistance in the past, with critics arguing it would merely shift the tax burden rather than provide genuine property tax relief.
Under LB 1244, sales tax exemptions would be removed for numerous services, including animal grooming, tattooing, nail care, and wedding planning. Additionally, the Nebraska Job Creation and Mainstreet Revitalization Act would be terminated at the end of June. The bill proposes reallocating $120 million from the state’s general fund to the school district property tax relief fund.
Impact on Small Businesses
Neil Sullivan, the state budget administrator, was the sole advocate for the bill during the testimonies. “This bill is part of the governor’s comprehensive budget package to shore up the budget shortfall and offer additional property tax relief to Nebraskans,” Sullivan declared, emphasizing the necessity to balance the budget before implementing tax relief.
This initiative is one of several in Pillen’s broader property tax relief agenda. During his state of the state address, Pillen expressed confidence in Nebraska’s economic resilience and stressed the importance of addressing the budget deficit, which currently stands at $471.5 million due to declining state tax revenues.
Sen. Murman acknowledged the potential challenges for business owners but noted the broad call for property tax relief from constituents. “The consumer can choose to – or not to – get a tattoo or purchase a zoo ticket much easier than they choose if taxes come out of their paycheck or if they pay property taxes on their home or ag property,” he said, urging lawmakers to consider tax exemptions on a case-by-case basis.
Marilyn Hansen, an Omaha-based interior designer, voiced her concerns, highlighting the misconception that interior design services are a luxury. She detailed her work with a single-income family needing to upgrade their home, demonstrating the essential nature of her services. “You think we are ‘luxury’ people. We are not. We are helping the little people,” Hansen argued, describing the severe impact of the internet on her business and the reduction of her staff over the years.
The Future of Mainstreet Revitalization
The bill also aims to phase out the Nebraska Job Creation and Mainstreet Revitalization Act, established in 2014. This program has supported various community projects, from courthouse renovations to housing upgrades, across Nebraska.
David Borrenpohl, a Johnson County commissioner, highlighted the importance of the tax credits provided by the program, which facilitated essential renovations like a new roof and HVAC system for the county courthouse. He warned that losing these credits would place a financial burden on local taxpayers.
The committee has yet to decide on the bill, and its approval remains uncertain given the historical reluctance to enact new sales taxes. Other discussions in the committee included a proposal to increase the cigarette tax by $1, diverting the additional revenue to the Nebraska Health Care Cash Fund for Medicaid purposes.
