Nebraska Self-Storage Operators Encouraged to Fight Sales-Tax Bills

Update 5/21/19 – With LB 289 stalled in the legislature, Nebraska lawmakers are pursuing an alternative approach by proposing a sales-tax amendment to LB 183, a bill that would make an adjustment in the valuation of agricultural land. The amendment is a scaled-down version of some of the provisions of LB 289 and would eliminate 28 sales-tax exemptions as a way to fund property-tax reductions, according to the source. Among the products and services subject to sales tax are candy, soft drinks, bottled water, motor-vehicle repair and self-storage unit rentals.

The secondary plan outlines about $100 million in property-tax relief compared to the $372 million comprehensive package under LB 289. The LB 183 amendment doesn’t include the half-cent increase to the state sales-tax rate or the hike in cigarette tax that are part of LB 289, the source reported.

Time is running out on the legislature to pass a property-tax relief measure this year. The current session will end on May 31, adjourning four days earlier than originally scheduled.

Similar to its efforts to defeat LB 289, the SSA is encouraging Nebraska self-storage operators to urge state senators to vote against LB 183. The sales-tax amendment was submitted on May 16 and is pending adoption.

5/8/19 – Self-storage operators in Nebraska are being encouraged to fight a bill that would add sales tax to industry unit rentals. The state legislature will begin debate this week on Legislature Bill 289 (LB 289), which changes provisions relating to county assessor inspections of real property for property-tax purposes.

LB 289 was introduced in January. If passed, it would bring the largest tax increase in the state’s history, according to sources. In addition to increasing the sales-tax rate from 5.5 percent to 6 percent, the measure would impose new taxes on 20 services, including self-storage. It would also cut property-tax relief from the state in half, raise the cigarette tax by 36 cents and increase the tax for buying a house.

Revenue from LB 289 would increase state aid to K-12 schools by about $500 million, sources report. Taxes on self-storage rentals would generate $1.2 million.

Like most states, Nebraska doesn’t currently tax self-storage rentals. To express their concern regarding the bill, industry operators can contact their district senator. The national Self-Storage Association (SSA) has also created a customizable e-mail message for their use. The form is available by e-mailing Joe Doherty, the SSA’s senior vice president, legal and legislative counsel. The association announced its effort in an e-mail newsletter to members this week.

The bill faced overwhelming opposition from state residents when heard two weeks ago by the legislature’s revenue committee. Governor Pete Ricketts has also spoken against it.

“When debate on LB 289 starts, Nebraskans will feel a bit of déjà vu. The bill is premised on the notion that Nebraska can finally get property-tax relief if we raise a bunch of other taxes to lower property taxes. The truth is that this method has been tried and failed,” Ricketts wrote in his weekly column. The governor offered three proposals and said he’d work with senators to find a solution.

Proponents of the bill released estimates showing homeowners in seven areas would receive a property-tax reduction, even after paying the higher sales taxes. “It's not a tax increase,” said Senator Lou Ann Linehan, a sponsor. “For the vast majority of people, it's a tax decrease.”

Sources:
Hastings Tribune, Nebraska Senators Assured Another Chance to Debate Property Tax Relief
SSA Weekly Magazine 5/20/19, Nebraska Operators Encouraged to Speak Out Against Storage Bill
SSA Weekly Magazine 5/6/19, Nebraska Operators Encouraged to Speak Out Against Storage Bill
Office of Governor Pete Ricketts, Property Tax Déjà Vu
Omaha World Herald, Battle Lines Drawn as Nebraska Property Tax Debate Begins in Legislature