Nebraska senators debate LB468 inheritance‑tax overhaul, reject two repeal amendments

Senators spent the bulk of the morning floor session debating LB468, the revenue and taxation bill sponsored by Senator Clements that would reduce statewide inheritance tax rates while shifting and reallocating multiple revenue sources to hold counties harmless.

Senator Clements told colleagues the committee amendment (AM874) revises how inheritance tax revenue is replaced for counties and described a handout showing estimated county allocations. "I've been working with people regarding some of the objections," Clements said, adding that the amendment is not perfect but that staff researched replacement options with the Department of Revenue.

Why it matters: opponents warned that reducing or eliminating the inheritance tax without credible replacement revenue would force counties to raise property taxes or cut services. Senator Raybould, who circulated a county‑by‑county handout, said the inheritance tax is used for roads, bridges and other capital needs and that a majority of survey respondents found the tax acceptable after hearing details. "If you take away the inheritance tax and don't replace the revenue, you are raising property taxes," she said.

Debate highlights: two competing floor amendments from Senator Bostar drew extended comment. AM1069 would have phased out the inheritance tax over 10 years (10% per year); Bostar said a decade allows counties time to adjust. After debate the body rejected AM1069 (4 ayes, 32 nays). Bostar then offered AM1137 to eliminate the tax immediately and give counties a one‑quarter cent local option sales tax to replace revenue; supporters said the option would let counties choose a path tailored to local retail bases. Critics, including the bill sponsor, called AM1137 an unfriendly sales‑tax change that lacked a revenue committee hearing and would shift revenue regressively to sales tax payers. The body rejected AM1137 as well (2 ayes, 33 nays).

Key fiscal disagreements centered on specific replacement sources in the committee amendment, including reallocations of insurance premium tax revenue, increases in certain fees (marriage certificates, vehicle inspection fees) and a proposed rise in the nameplate capacity tax on renewables. Senator Clements said the nameplate change reflects long‑run property tax increases to equalize the load across taxpayers; opponents said nearly doubling the nameplate rate to meet pay‑fors could chill renewable development and disadvantage some counties.

Several senators with county experience described practical uses of inheritance funds. Senator Meyer recounted spending an inheritance fund to repair flood‑damaged county roads and bridges in 2019; Senator Brandt and others said counties rely on the funds as a cash reserve for emergency repairs and short‑term cash‑flow needs. "This is not a slush fund," Brandt said; "it is a cash reserve fund." Supporters of LB468 and AM874 argued that the committee approach spreads revenue more evenly and stabilizes county income compared with a volatile inheritance tax.

What passed and what's next: neither repeal amendment succeeded; the committee amendment remained the primary framework for LB468 moving to select file. After votes the clerk read additional committee reports and the body recessed.

Quotes: "We have to be responsible in making decisions with regards to finances so it doesn't result in those taxes later being increased," Senator Dungan said. "If you take away the inheritance tax and don't replace the revenue, you are raising property taxes," Senator Raybould warned. Senator Clements summarized the committee work: "This is going to equalize that, with inflation."

The Legislature recessed with LB468 still on the calendar; senators signaled continued work on fiscal details before select‑file consideration.