By Deena Winter | Nebraska Watchdog
LINCOLN – Nebraska Sen. Ernie Chambers warned Nebraska lawmakers Wednesday that if they don’t like his bill repealing a sales tax law passed during his absence, he will make it very difficult for them to get a tax reform study passed.
Chambers was defiant, boastful and empathetic to the poor all at once as he talked about how he will work to repeal legislation passed last year allowing cities to increase their sales tax rates by a half cent, up to a maximum of 2 cents on the dollar.
Chambers served 38 years in the Legislature – mastering the art of filibustering and parliamentary maneuvering in the process – before sitting out the past four due to term limits. But he’s back and he’s flexing his political skills – killing a bill on the floor earlier Wednesday by convincing his colleagues to attach a provision the introducer didn’t like.
He said he opposes the law allowing cities to increase their sales tax rates because it’s a regressive tax that hurts poor people most.
“Little Orphan Annie pays the same rate of tax as Daddy Warbucks,” he told the Revenue Committee.
The sales tax could climb to 7.5 percent in some cities, if a super-majority of the local governing board and local voters approve the tax increase.
“When it comes to the poor, the sales tax hits them hardest,” Chambers said. “We don’t have a lot of discretionary income.”
Proving the saying that politics makes strange bedfellows, his bill was supported by Americans for Prosperity. The bill was opposed by the League of Nebraska Municipalities and several representatives of cities testified against it.
Lynn Rex of the League of Municipalities said 202 cities have a local sales tax ranging from .5 to 2 percent. The cities of Sidney and Alma and the village of Waterloo have already exercised the new law and increased their sales taxes. Nebraska City and Bellevue voters rejected proposals to increase theirs.
The law only allows the money to be used for infrastructure projects (aside from an exception for Lincoln), cities must partner with another governing body and the tax increase sunsets after 10 years or the life of a bond.
Waterloo City Attorney Ken Bunger said voters approved an increase in Waterloo’s tax rate to 2 cents for streets because there are few places to find revenue in the village of 600.
“The opportunity to have another half-cent is a big deal to a village,” Bunger said.
Nebraska City’s city administrator, Joe Johnson, said his city’s voters rejected a sales tax increase to build a new swimming pool – which is evidence the law is working as intended.
“The citizens of Nebraska City were in control,” he said.
Lincoln Finance Director Steve Hubka said since the law requires 70 percent of the local governing body to approve any sales tax vote, “This is not a blank check to communities and it’s a vote that would not be easily earned by any city government along the way.”
While Lincoln officials have no plans to seek an increase now, Hubka said the city needs the flexibility after years of budget-cutting and declining revenue.
But Chambers roared back in his closing statement, noting that all the people who spoke against his bill represented cities, not “the people who will bear the tax.”
“I live around poor people,” he said. “And I see how damaging this is.”
He said if the League of Municipalities helps kill his bill, he’ll retaliate by opposing “anything the League brings.”
“What do I care about taking the rest of the session… to help people who need it,” he said. “I see poor people every day, and you all obviously don’t.”
Chambers also said if his bill doesn’t pass, supporters of a tax reform study will need 33 votes to pass that bill because he’ll try to kill it. Motions for cloture can be approved by two-thirds majority, or 33 votes, once the speaker decides the bill has gotten a full, fair debate.
Chambers noted his bill was cosponsored by Omaha Sen. Brad Ashford – who, ironically, sponsored the very bill Chambers’ bill seeks to repeal. Ashford said later in an interview that if the state tax system is reformed and sales tax broadened – and he thinks it will be – cities won’t need to increase their sales tax rates.
“I think Ernie’s right,” he said. “There’s no need to have a local option sales tax if we do tax reform in a way that lowers the sales tax rate but broadens it aggressively.”
He said the reason he sponsored the bill last session allowing cities to increase their rates was that tax reform efforts “weren’t getting anywhere.”
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