Editor's Note: In a story April 3 about a tax debate in Nebraska, The Associated Press erroneously reported the name of John Hansen's organization. He is president of the Nebraska Farmers Union, not the Nebraska Farm Bureau. A corrected version of the story is below.
After years of supporting tax credits for Nebraska's farmers and ranchers, some urban lawmakers are complaining that other residents aren't getting a fair share.
The dispute flared in the Legislature last week during a heated debate over Gov. Pete Ricketts' property tax package, prompting calls for a more broad-based tax plan.
To address the frustrations, a group of urban and rural lawmakers has started meeting to talk about a larger package that would include income tax cuts. Sen. Jim Smith of Papillion, a small business owner who has repeatedly tried to cut income taxes, said he hopes the group arrives at "something comprehensive" that will pass in the Legislature next year.
Smith said he supported property tax bills for agriculture in the past because he recognizes the industry's importance to Nebraska, but he believes small business owners and urban residents are being ignored. This year's property tax bill aimed primarily at agriculture was "the straw that broke the camel's back," he said.
"Absolutely, agriculture is our largest industry," Smith said. "But you shouldn't interpret that to mean other businesses are of lesser importance. It bothers me to hear them say they want to remain at the front of the line, and they're not willing to share a place with other businesses. All I'm saying is I'm with you, but we need to share that place in line."
Smith, a conservative Republican, is among a group of largely urban senators who are questioning the relentless focus on property taxes for farm and ranch landowners.
Sen. Tanya Cook of Omaha said farmers chose their profession and reaped large cash windfalls several years ago, when corn was selling for as much as $8 a bushel. Cook said Omaha's stockyards and manufacturing industries didn't receive state benefits when they were struggling, yet farm and ranchland owners are insisting on state help.
Cook, a Democrat whose district is overwhelmingly urban, said she'd rather see the money used for public schools, workforce training programs and colleges.
Sen. Patty Pansing Brooks of Lincoln said urban senators don't hear nearly as much from constituents about property taxes as they do about education and jobs. Pansing Brooks, a Democrat, said lawmakers need to look at the entire state when making policy, but she isn't convinced that farmers need additional tax benefits.
"If we're talking about farmers in need, real need, I'm happy to talk about it," she said. "But not all people in agriculture are in real need."
Sen. Burke Harr of Omaha said lawmakers need to change the state's tax structure, but he argued senators need to look more closely at incentives.
"What are we doing wrong, and how can we do it better?" said Harr, a Democrat.
Rural senators note that agricultural producers have shouldered an increasingly large share of the expense because of soaring farm and ranchland values, which raised their property tax bills.
Sen. Curt Friesen, a farmer from Henderson, said many producers would rather see property taxes than income taxes lowered because the property taxes are a constant expense. Because farm and ranch incomes fluctuate in good years and bad, producers don't have to pay as much in taxes when they don't earn as much. During those strong years, the cost of doing business also tends to rise but doesn't decline as quickly in a downturn.
"If any (urban senators) can show me that their constituents have had an 18 percent increase in their taxes over the past two years, I'm listening," said Friesen, a Republican. The farming boom "was great while it lasted, but in the long-term it did us more harm than good."
Sen. Al Davis of Hyannis said state and local governments have few revenue sources other than income, sales and property taxes, and property taxes represent a disproportionately large share. Davis said lawmakers need to broaden the state's sales tax base by eliminating exemptions, which would ease pressure on income and property taxes.
"If you tax more things, you can have a lower rate," said Davis, a Republican. "But we don't have a lot of minerals to tax. We don't have much tourism to tax. So unfortunately, we've got to tax ourselves."
Nebraska Farmers Union President John Hansen said the long-term solution to addressing property taxes is to provide more money for K-12 public schools, particularly the rural ones that rely heavily on property taxes. But so far, he said, lawmakers have been unwilling to do so.
"You go out and talk to farmers, and they're in a world of hurt," Hansen said.