to tax relief

LINCOLN (AP) — Property tax cuts or higher pay for teachers?

Sales and income tax reductions or state aid to schools?

No one knows what the Legislature will do with $51.8 million in additional revenue identified last week by the state's Economic Forecasting and Advisory Board.

But most everyone has an opinion on where it should be spent.

More than anything else, Gov. Mike Johanns wants to use the money for property tax cuts.

The Nebraska Chamber of Commerce and Industry wants to use the money to lower sales and income taxes.

And there are others who will want a piece of the pie, including teachers who think the state should help pay for higher salaries.

But Sen. George Coordsen of Hebron isn't losing any sleep over the debate.

"It's not a whole lot of money," he said Wednesday. "I don't think anybody should get excited over how to spend it."

Ultimately, the Legislature will have to decide next session whether the additional state revenues are spent on new or current programs, used for tax cuts or saved.

"It would seem that putting the money back in the pockets of the taxpayers would make better sense than looking for ways to spend the extra revenue," said Roy Smith, president-elect of the chamber.

While Johanns agreed that the money should not necessarily be used for new or existing programs, he reiterated his support for lowering property taxes. But if it came down to the last day of the legislative session and lawmakers said all they could approve were sales and income tax cuts, Johanns said he would accept that.

"I'm going to take tax relief wherever I can get it," Johanns said.

Coordsen, a member of the Revenue Committee, said he did not think the Legislature would go for a sales or income tax reduction. The $51.8 million would only pay for a quarter-cent sales tax reduction for one year, Coordsen said, and it would result in a miniscule reduction in the base rate of income tax.

Some of the additional $51.8 million in state revenue could be put in a property tax relief fund created by the Legislature last session to provide tax credits to property owners, Johanns said.

Coordsen said he expects the money will either be used for state aid to education or be put in the tax relief fund like Johanns wants.

That relief fund will reduce tax bills by about 2 percent this year and 2.5 percent in 2000 and ensure tax breaks of 4 percent to 5 percent in 2001 through previously planned levy drops. The second-year reductions would come in the form of tax credits; this year's breaks would come out of $30 million in one-time assistance to community colleges.

Johanns also said he wants to look at ways to reduce property taxes for owners of agricultural land. He referred to a recently released study by the University of Nebraska's Public Policy Center that said Nebraska's taxes on farmland are either the highest or second highest in the country.

The Legislature's Revenue Committee has scheduled an interim study hearing for Nov. 12 to discuss that issue.

On the teacher pay issue, Johanns has not said whether he favors the state contributing to raise salaries, other than to say it would be expensive and may not draw much support from state senators.

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