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LINCOLN, Neb. (AP) — Nebraska Gov. Pete Ricketts will revive his push for tax cuts in the 2018 session with a package intended to win support from rural lawmakers who want to focus on farmland taxes and city-dwelling conservatives who are clamoring to lower income and residential property taxes.

The Republican governor, who is up for re-election in November, said the state budget and taxes are his two top priorities for the session that begins Wednesday.

In an Associated Press interview, Ricketts said he hopes to balance the desires of groups that fought one another for tax benefits in the 2017 session.

“We have to build a broad coalition,” Ricketts said. “It can’t just be rural senators or urban senators, because no group has enough votes to get what they want.”

The governor’s previous tax plan stalled in May, in part because farm groups opposed it. The plan would have lowered Nebraska’s top personal and corporate income tax rates, adjusted the way agricultural land is valued for tax purposes, capped statewide property tax growth and expanded the earned-income tax credit for low-income residents.

Farm organizations argued that it didn’t do enough to help with property taxes that have surged because of sharply rising land prices, even at a time of depressed prices for crops and livestock. Business groups endorsed the plan, saying it would promote job growth, and noted that previous state efforts to control property taxes have failed. Property taxes are levied by local governments, and the state can only influence them indirectly.

Additionally, some senators argued that many of the state’s budget problems 7/8— the state faces a projected $173.3 million revenue shortfall — were induced by earlier income tax cuts that haven’t produced major economic benefits. But Ricketts said Nebraska needs to lower its tax rates to compete with neighboring states.

“We want Nebraskans to keep more of their own money,” he said.

Ricketts said he is working with Sen. Jim Smith of Papillion, who chairs the tax-focused Revenue Committee, on the new measure. He said he and lawmakers can lower taxes without major service cuts by restraining the annual growth in state spending.

“In Nebraska, we really do have a history of coming together to solve our problems,” Ricketts said. “If everyone can bring that spirit to the table, I’m confident we can reach a solution to get that tax relief. But everybody’s not going to get precisely what they want.”

Smith said he and Ricketts “heard loud and clear” the concerns about agricultural property taxes during the 2017 session, and will present a plan that tries to address them. He argued that the package needs to address income taxes as well to survive in the Legislature and help the state compete with some of its lower-tax neighbors.

The plan would phase in the tax changes over several years to avoid the state’s current budget problems, he said.

“The governor and I believe very strongly that there is a path forward,” Smith said.

Lawmakers could try to work around the budget challenges with so-called revenue triggers, which would reduce income tax rates automatically in years when the state collects more money than expected. Ricketts said he supports the use of such triggers, but declined to say what his plan would entail until after his annual State of the State address in January.

Critics have said the triggers effectively put Nebraska’s tax policy on autopilot and could hinder the state’s recovery after a sharp revenue downturn.

It’s unclear what impact, if any, the recently passed GOP congressional tax plan will have on Nebraska’s tax collections. Nebraska’s tax laws are closely tied to the federal system and the changes could result in an increase or decrease in state tax revenue, which could then help or hinder the governor’s tax package.

Nebraska Farm Bureau President Steve Nelson said he has discussed the proposal with Ricketts and believes they will find common ground, unlike the 2017 session, when his group lobbied against the governor’s tax plan.

He said his group would prefer to address property taxes through the Legislature, but wouldn’t rule out a citizen-led ballot initiative if those efforts fail. Sen. Steve Erdman of Bayard has said he’ll launch a ballot campaign if lawmakers don’t act in 2018.

“There’s a growing frustration with the fact that it’s been very difficult to make progress” in the Legislature, Nelson said. “That’s why you see people out there with a lot of different ideas.”


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