Broad package LB1244 would tax dozens of services; witnesses warn of industry impacts

Senator Dave Mermin introduced LB1244 as a measure to broaden the sales tax base by adding about 40 new services, repeal six exemptions, change program sunsets and permit local option taxes on mechanical amusement devices. Mermin said the bill is intended to reduce Nebraska’s reliance on property taxes and make the sales tax system more modern and equitable; he handed out AM1964 to transfer $120 million from the general fund into a school district property tax relief fund as part of the package.

State budget staff supported the bill as part of the governor's mid‑biennium revenue package. Opponents from a wide cross section of industries and advocacy groups urged the committee not to advance LB1244 as drafted. The tattoo and body‑art community testified that taxing body‑modification services would place administrative burdens on many sole‑proprietor booth renters and could push work underground. Preservationists and developers warned that Section 6 would sunset the Nebraska Historic Tax Credit and derail ongoing rehabilitation and affordable‑housing projects that rely on the credit. Agricultural cooperatives and farm groups cautioned that repealing the mineral‑oil exemption and taxing lab testing would raise operating costs for cooperatives and producers. Self‑storage and apartment representatives argued a tax on rent or property management fees would be regressive and raise housing costs. Skill‑game and mechanical amusement operators said proposed taxes could render small rural businesses unviable.

Senator Mermin acknowledged the breadth of opposition and told the committee he wanted to take conversations item‑by‑item; the committee closed the public hearing after receiving extensive written and oral testimony.