Commissioners continue to watch LB1067, which would eliminate inheritance tax

YORK COUNTY – “As you know, I’ve been very involved with LB1067, which, if it passed, would eliminate inheritance tax,” York County Commissioner Chairman Randy Obermier said this week during the regular meeting of the York County Board. “I’ve testified against the bill as that revenue has historically been very important to counties and state lawmakers need to find a way to replace that revenue if they take it away. Last week, there were five hours of debate on the floor (of the legislature). It’s been pulled off now, I’m not sure if it will come back. Our state senator’s name is still on the bill (with 24 others), but she has said she’s not for it unless they come with a way to replace that revenue.”

The current status of the bills is that an amendment is pending.

LB1067 was brought forward by State Senator Rob Clements of Elmwood which would eliminate the inheritance tax in Nebraska over the course of a 5-year period.

In response to this legislative bill, Obermier earlier issued the following statement, as the bill would have a significant impact on county funding:

“I would like to start off by explaining what the inheritance tax is. Currently, under Nebraska Statute 77-2004, as explained in the first chapter, any direct descendant of someone who passes after Jan. 1, 2023, would have to pay 1% of the clear market value more than $100,000. So, if you inherited $500,000, you pay 1% on $400,000 or $4,000. Now there are different levels of the tax. 77-2005 is for aunts, uncles, nieces, nephews – that percentage is 11%. Then there is 77-2006 which addresses all other cases with a tax of 15%. Those are the numbers which represent the inheritance.

“Now, to address the use of inheritance tax in York County — it has been viewed as a source of revenue for some time now. Considering the recent history (previous five years), we (York County) have averaged $1 million per year. That money is held in Fund 2700 by York County and is under the spending discretion of the York County Board of Commissioners.

“The usual expenditures from this fund have been for our (the county’s) support of programs/agencies such as CASA, Blue Valley, Hope Crisis Center, Adopt A Pet, Henderson Ambulance, the Kilgore Library, York County Development Corporation (YCDC) and the Southeast Nebraska Development District (SENDD). In the 2023-24 budget year, those expenditures added up to $175,000. We also transferred money to the general fund to purchase a sheriff’s vehicle, a pickup for the roads department and a motorgrader for the roads department. These three purchases totaled $500,000. With the recent snowstorm, I expect we (the county) will need about $100,000 for the extra expenses for snow removal, which will need to be taken from the inheritance fund.

“If this source of revenue goes away, where do the funds come from, so we can continue to support these institutions? Or do we tell them to go away?

“And I can tell you the normal rotational purchases of the patrol vehicles and motorgraders, like all other equipment, will go to the property taxpayer. It’s not like we can just stop purchasing them.

“This bill has an inclusion for reimbursement for state prisoners lodged in a county jail and allows county boards to use the County Visitors Promotion Fund (which comes from any imposed county lodging tax). As you might expect, neither jail reimbursement nor county lodging tax comes anywhere near replacing the revenue we would lose from the elimination of the inheritance tax. And it must be remembered not all counties have jails (and therefore no state prisoners being lodged there to be reimbursed by the state) and not all counties have lodging facilities, let alone a lodging tax in place. York County has both – but neither the reimbursement for state prisoners or using the visitors promotion fund would come close to replacing inheritance funds. Also, using the visitors promotion funds for other purposes would keep them from being used for what they were originally intended.

“I will also tell you how Governor Jim Pillen is correct when he calls the inheritance fund our slush or reserve fund. It absolutely is. If this fund goes away, we will have to add additional money to our budget request to increase our county reserves – that’s just a good business practice. You can ask any successful businessperson that question and you will get the same answer – you have to have reserves.

“Please understand, I don’t like taxes anymore than the next guy, but I will stand up for what I feel is right. If you take a revenue source away, it will have to be replaced. That increase in York County property taxes will be the result of our state senators’ actions, if they vote in favor of this bill.”

 

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