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Linehan Ricketts

Sen. Lou Ann Linehan and Gov. Pete Ricketts

The Legislature's gathering tax reform storm is sparking some early thunder and lightning, setting the stage for a contentious showdown when the proposal lands on the legislative floor next week. 

As Gov. Pete Ricketts and Revenue Committee Chairwoman Lou Ann Linehan offered diametrically opposed descriptions of the tax plan proposed by her committee, supporters of an initiative petition drive to impose deep reductions in property taxes held a noon-hour rally in front of the state Capitol to dial up the pressure.

The initiative proposal seeking a 2020 vote of the people on a constitutional amendment to provide a state income tax credit for 35 percent of local property taxes paid is designed in part to push the Legislature to act before voters take the matter into their own hands. 

Voter enactment of that proposal would trigger increases in state tax rates or reductions in state programs and services, or both. 

Ricketts' description of the property tax reduction plan as "the largest tax increase in state history" in the aftermath of the Revenue Committee's vote to send the package to the floor sparked an 11 p.m. email statement from Linehan on Tuesday flatly stating that "the governor is wrong."

"It's tax reform and a shift in how we fund education, but it's not a spending increase," the Elkhorn senator said.

"The resulting change in how we fund education provides meaningful property tax relief for homeowners and farmers," Linehan said.

"The governor is wrong when he says the Revenue Committee's tax reform plan is new government spending. It is not. In fact, we broaden the tax base, increase the state's share of education funding and cut property taxes."

The opposing rhetoric from the governor's office has included tweets by both Ricketts and Taylor Gage, his spokesman and director of strategic communications, who has recently zeroed in on news coverage.

"Media should not buy into branding this bill as 'property tax relief' -- it's not," Gage tweeted. "It's a massive tax increase for spending."

"Headline writers should look under the hood of the Revenue Committee's tax bill before carelessly describing the largest tax increase in state history as 'relief,'" Gage also tweeted. 

The committee bill increases the state sales tax rate by one-half cent, hikes the state cigarette tax and wipes out two dozen sales tax exemptions, while dedicating all of that increased revenue to property tax reductions delivered through increased state aid to schools. 

Ricketts tweeted: "I urge senators to do the right thing and kill these tax hikes."

Meanwhile, Revenue Committee staff rushed to assist the legislative bill drafter's office in preparing the extensively amended bill (LB289) for floor debate next week.

In a tactical move, Linehan wants the full Legislature to consider the proposal before senators tackle the 2019-21 budget bill that's scheduled for debate next Wednesday.

The Appropriations Committee advanced its package of budget bills on Wednesday, with the main budget bill (LB294) commanding a 7-2 vote. Sens. Robert Clements of Elmwood and Steve Erdman of Bayard voted no. 

The Revenue Committee's bill would use about $120 million that's now part of the state's property tax credit fund in building its property tax relief package. The Appropriations Committee plan would share the governor's proposed $51 million-a-year increase in the property tax credit fund with the state's depleted cash reserve fund.

That Appropriations proposal (LB298) was also advanced on a 7-2 vote, with Clements and Erdman voting no.

"To the best of our ability we've made the adjustments in the recommendations to the floor that this committee agreed to, the majority of the committee," Appropriations Chairman John Stinner of Gering said.

"If they pass (the Revenue Committee bill), it will change our budget," he said. 

Speaker Jim Scheer of Norfolk said he's open to placing the Revenue Committee proposal on next Tuesday's agenda if amendments have been completed in time by legislative staff to reflect committee action and if the proposal is ready for debate. 

Linehan told her committee later in the day that it can meet that time frame and scheduled a briefing to detail provisions of the package for all senators and legislative staff at 1 p.m. Thursday.

Ten senators participated in Wednesday's property tax initiative rally.

It's time for "a once-and-for-all solution," Erdman told a small gathering at the front steps to the north entrance of the Capitol.

"The talking is over," he said. "If we get this on the ballot, you will force the Legislature to make a decision."

"All options need to be on the table," Sen. Tom Briese of Albion said. 

Sen. Tom Brewer of Gordon said the Legislature is about to take its initial look at the tax reform package crafted by the Revenue Committee and "my prediction is that it will become somewhat of a Frankenstein" once it is debated and submitted to action on the floor. 

Both Erdman and Sen. John Lowe of Kearney took swipes at government spending.

"We need caps on spending to keep it under control," Lowe said.

Erdman told the gathering that "we spend money like a drunken sailor."

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Reach the writer at 402-473-7248 or dwalton@journalstar.com.

On Twitter @LJSDon.

Reporter JoAnne Young contributed to this story.

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