Should record cash reserve = tax relief? - News, Weather and Sports for Lincoln, NE; KLKNTV.com

Should record cash reserve = tax relief?

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By: Bill Schammert
bschammert@klkntv.com

Big news for Nebraska's "savings account," the state hit a record $679 million in its cash reserve.  But as the Tax Modernization Committee gets set to meet Wednesday, should that number play a part in tax relief?

Lincoln Senator Kathy Campbell says the group of several state senators needs to proceed cautiously.

"I think it'll definitely be a question on the table," Sen. Campbell said.

The rainy day fund came in 8-percent above projection because of higher tax revenues.  However, Sen. Campbell, a member of the committee, says it needs to look at all options.

"It's so important for people to understand the inner relationship between sales, income and property taxes."

Renee Fry is the Executive Director of the OpenSky Policy Institute, she says the reserve acts as a savings account, and the money needs to stay put.

"We really should be setting those [funds] aside," Fry said.  "It's finally at a safe level and we wouldn't want to dip into that prematurely."

Fry says she's seen other states with higher than average cash reserves and believes it is largely due to the passage of the Fiscal Cliff.  She doesn't believe it will last long.

Ahead of the Tax Modernization Committee hearings, Fry says she hopes the senators will focus on property tax reform.

"If we expand the sales tax to more services as we should to have a modern sales tax, we could use that revenue to reduce property taxes.  That would put our tax code in much more balance," Fry said.

The committee meets for the first time at the State Capitol on Wednesday, at 10:00 a.m.

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