LINCOLN (AP) -- A Nebraska senator took aim Wednesday at a new state law that allows cities to increase sales taxes with voter approval, saying it was passed without consideration for the poor.
Sen. Ernie Chambers offered a bill to the Legislature's Revenue Committee that would repeal the law, which has widespread support among Nebraska cities. His repeal measure drew heavy resistance from Nebraska mayors and other city officials, who pointed to voter safeguards in the law.
"We think it's absolutely important for us in terms of being able to fund basic infrastructure needs across this state," said Lynn Rex, executive director of the League of Nebraska Municipalities.
The law, which was approved last year, allows cities to increase their local sales taxes to as much as 2 percent, if they receive voter approval. The state already levies a 5.5 percent sales tax.
The law also requires at least 70 percent approval from a city council or other local government before any proposed increase can appear on the ballot. The questions are put to voters in a primary or general election, which usually have higher turnouts than special elections. The law also imposes a 10-year expiration date for any tax rate greater than 1.5 percent, unless cities are using the revenue to repay bonds.
Gov. Dave Heineman opposed the measure last year, but lawmakers narrowly overrode his veto. Chambers wasn't in the Legislature at the time, having left in 2009 because of term limits. He was elected again after sitting out a required one term.
On Wednesday, he said city officials who testified at the hearing weren't speaking for low-income residents, who pay a larger share of their income into sales taxes.
"What you saw were individuals representing cites and municipalities," Chambers said after city official testified. "Not one was speaking on behalf of the people who will bear this tax. These things can be presented a certain way to the public, so that it seems like a good thing for them. They know the people will never organize to oppose something like this."
Nebraska has 530 cities. Of those, 107 municipalities impose a 1 percent sales tax and 91 impose a 1.5 percent sales tax. Three local governments are set to enact a 2 percent sales tax later this year: the cities of Sidney and Alma, and the village of Waterloo.
Nebraska cities made the law their top legislative priority last year, with support from the cities of Omaha, Lincoln, Kearney and others. Rex said more than 250 Nebraska cities have already reached their property tax lid and are struggling to meet their infrastructure needs.
The city of Omaha has estimated that a local option increase from 1.5 percent to 2 percent would provide $29 million in additional net revenue. Lincoln city officials estimated that the same increase would generate an additional $21.2 million if voters were to approve it.
The bill has drawn support from the Nebraska chapter of the taxpayer group Americans for Prosperity.
"We think it's the worst time for local governments to raise taxes when Nebraskans have already been cutting back," said Matthew Litt, the Nebraska state director of the group Americans for Prosperity.
Chambers' bill is co-sponsored by Sen. Brad Ashford of Omaha, who led the charge for the original sales-tax law last year. Ashford did not attend the hearing.
The bill is LB266.
Lawmakers consider repealing roads funding
LINCOLN (AP) -- Business groups, cities, roads departments and other groups told lawmakers Wednesday that they do not support a push to repeal a law that diverts state sales tax revenue to pay for roads.
Lincoln Sen. Danielle Conrad introduced the bill that would repeal the law, saying she doesn't want more than $1 billion over the next 20 years taken from education and other services. While Conrad supports road construction projects, she said she wants lawmakers to study the issue to make sure there isn't a better avenue for generating funds to improve roads.
"We keep those funding streams separate for a reason," she said. "When push comes to shove and people have to make a call, I am going to come down on the side of kids over concrete. That's where my heart and values are."
Former state Sen. Deb Fischer introduced the roads bill that was passed in 2011. The law requires one-quarter of 1 cent out of Nebraska's 5.5-cent sales tax be used to pay for county and state roads projects. Starting this year, $65 million or more will be set aside annually for roads projects over the next 20 years.
"To bury our heads in the sands and not acknowledge a more than $1 billion dollar commitment that spans over 20 years would be incomplete and irresponsible," Conrad said.
She requested that the issue be included in a comprehensive tax commission study that would also review Gov. Dave Heineman's tax overhaul proposal, which was shelved after opponents complained about his plan to eliminate sales tax exemptions. Lawmakers have not voted to approve the tax study commission.
The Legislature's Revenue Committee heard Wednesday from opponents of the measure who say the money will help pay for badly needed road construction projects. Multiple cities, chambers of commerce, and banking, trucking and petroleum groups testified.
The Nebraska State Education Association and Voices for Children support the repeal of the law. Voices For Children Executive Director Carolyn Rooker said she doesn't want funding to be diverted from children in poverty.
Taxation on gas and vehicles is a major way the state funds roads projects. Conrad said she doesn't think increasing taxes on gas is the right solution, given the current economic climate. But as gas revenues decline, roads departments need reliable funding, said Joe Mangiamelli, who represented the city of Columbus. He said the funding from sales taxes offers a constant stream of revenue to start building new roads.
"If we want to see these projects constructed, there has to be a way to pay for it," said Greg Wolford, a state highway commissioner.
Norfolk Chamber of Commerce president Dennis Houston said maintaining roads promotes economic prosperity and creates jobs. He said if the state wants communities to grow, it needs to provide more funding for roads.
Jessica Kolterman, representing the Nebraska Farm Bureau, said farmers also opposed the bill because farmers need better roads to transport food to markets.
"Good roads, highways and bridges are essential to farmers, who face more and more global competition," she said.
Conrad said she understands the concerns about her legislation and said it is hard to ask legislators to reconsider a previous decision.
"The law elevates roads over other critical obligations like education, health care and public safety, and that is not fair," she said. "We need to ensure a balanced approach for funding all of those areas."
The bill is LB531.