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LINCOLN, Neb. (AP) — Nebraska Gov. Pete Ricketts pitched a new version of his property and income tax plan to lawmakers on Wednesday but acknowledged that it still needs some work to pass this year.

Ricketts stressed the need for compromise in his remarks to the Legislature’s Revenue Committee, which will consider several competing plans from rural lawmakers who want to focus purely on property taxes.

“We’ve got to all work together,” Ricketts said. “Not everybody’s going to get what they want, but that’s the nature of compromise.”

The latest version of the governor’s plan won a key endorsement from the Nebraska Farm Bureau and other agricultural groups, although some farm advocates remain staunchly opposed. Critics argue the plan favors the wealthy and doesn’t do enough to address property taxes that have soared since 2006.

Ricketts and the bill’s sponsor, Sen. Jim Smith of Papillion, both described the bill as a “work in progress” but painted it as an effort to unite business and farm organizations that have been at odds over which taxes to cut.

“I think it’s in everyone’s best interests to try to find a path forward,” said Smith, chairman of the Revenue Committee.

The bill would eliminate Nebraska’s existing property tax credit program, which benefits all property owners regardless of whether they live in the state, and shift the money into a new credit that only helps resident homeowners and agricultural land owners. Corporations would lose their property tax savings but would receive income tax cuts.

A previous version of the measure would also have paid for the property tax credits using leftover money from years when the state collects more revenue than projected. The new plan eliminates those so-called revenue triggers, requiring instead that lawmakers draw about $45 million from the state’s cash reserve this year and adjust for lost revenue in the future.

Under the new plan, resident homeowners would get an income tax credit equal to 12 percent of their property tax bill in 2018, capped at $280. Those numbers would increase gradually until hitting a cap of 30 percent in 2031. The maximum savings at that time would be $780.

Residents who own farm- or ranchland would get a refund equal to 10 percent of their property tax bill as well, with no cap. The percentage would increase at the same rate as the residential tax credit.

The bill would also phase down Nebraska’s top individual income tax bracket, from 6.84 percent to 6.69 percent. Nebraska’s corporate income tax rate would drop from 7.81 percent to 6.69 percent for all taxable income beyond $100,000.

Additionally, the plan would commit $10 million to job training programs.

Some senators on the committee voiced criticism of the plan, noting that the changes made it difficult to know how much it would cost the state.

“My fear is that such steep cuts would leave future legislatures with no option but to raise sales taxes,” said Sen. Burke Harr of Omaha.

Nebraska Farm Bureau President Steve Nelson said his organization was “generally supportive” of the refundable income tax credits proposed in the measure, but only if they increased to 30 percent of the total tax burden over time.

“While the changes outlined are not perfect, we recognize we are in an ongoing conversation about how best to arrive at property tax relief, and these conversations will continue,” Nelson said.

Nelson and some farm groups have said they’re likely to pursue a property tax ballot measure if lawmakers don’t act this year.

Al Davis, a former state senator now representing the Independent Cattlemen of Nebraska, said the plan doesn’t fix the rising property tax rates that have hurt ranchers throughout the state.

Scott Wagner, a farmer from Hooper, Nebraska, said lawmakers and advocates have spent too much time arguing the issue without major results.

“Instead of bickering about what we should or shouldn’t be doing, let’s figure out the answers,” he said.

Members of the Revenue Committee ended the hearing without taking action on the bill. Smith said they could begin a general discussion of this year’s major tax bills as early as next week.


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