McCOOK, Nebraska -- Red Willow County commissioner Earl McNutt may have the opportunity Thursday to speak against Nebraska counties losing inheritance taxes.
The move to eliminate inheritance taxes by Gov. Dave Heineman and Omaha Sen. Abbie Cornett, who introduced Legislative Bill 970 ending the county inheritance tax, could affect some county budgets by millions of dollar annually, McNutt said. The Legislature's revenue committee plans a hearing Thursday, at 1:30 p.m., during which members of the Nebraska Association of County Officials (NACO) will speak against the bill.
According to the latest figures available from the NACO, of which Red Willow County is a member and McNutt is a board member, the state's 93 counties receive proceeds from the tax which amounted to nearly $42 million in 2007-08.
On Jan. 18, Gov. Heineman said that Nebraska is one of only eight states that have inheritance taxes. He sees the elimination of inheritance taxes as tax relief for Nebraska's middle class. Counties officials, however, are afraid they will have to raise taxes to make up for the lost revenue.
Red Willow County commissioner Steve Downer called this a "fund-raiser" for the state of Nebraska, eventually costing the state's taxpayers money.
A Douglas County budget official told the Omaha World-Herald, "I think the governor is doing this so he can say he cut taxes without having to cut services for the state."
Red Willow County uses its inheritance tax fund as a savings account, dipping into it to offset shortfalls in funds within the county budget. Over the past five years, the county has accessed $1 million in inheritance taxes.
McNutt said counties don't charge for their services, and have very few avenues for revenue other than taxes, such as real estate taxes, inheritance taxes and, in some counties, sale taxes. "The cost of doing business doesn't ever get cheaper," he said.
The state has proposed in the past to take inheritance taxes away, one proposal rerouting them into state coffers and then back to counties. Commissioner Steve Downer said this last proposal goes further than any other proposal -- "the funds won't come back to the counties."
Fellow commissioner Vesta Dack called inheritance taxes "a survival tool" for small counties.
"If the state doesn't provide a way to recoup these taxes, they're lost."