Beginning January 1st, a half-cent sales tax will go into effect in Gage County to help pay off a huge federal civil judgment against the county.
The Gage County Board voted 7-0 Wednesday to put in place the tax, which was enabled through legislation sponsored by State Senator Myron Dorn, of Adams. Money from the tax will be used to help pay off more than $30 million the county owes to the so-called Beatrice Six, including legal fees and interest.
Board member John Hill said no one likes to put in place a tax, but he said it will help soften some of the impact on property taxpayers.
"Certainly we had ample discussion at our town hall meeting. This will help get the judgment paid and get it behind us".
Under the new law, the county can use the sales tax until the judgment is paid off, or until January 1st, 2027, when the law sunsets. County Board Chairman Eric Tiemann says the tax expands the number of people helping to pay off the judgment. "It's a broader window of taxpayers. We go from a twenty six thousand-person base to somewhere in the forty thousand population base. That doesn't even describe the whole story.....with landowners versus non-landowners", he said.
A supermajority or five votes of the Gage County Board were needed, to put the tax in place. It’s been estimated the half-cent would provide another $1.3 million annually to help pay the civil judgment. Gage County is making its first payments totaling $3.8 million, from property tax funding.
Tiemann said the county reduced its tax request in this year’s budget by just under two-percent, largely because of lower overall property valuation. But, the county was required to increase its overall property tax levy to the 50-cent maximum, in order to use the sales tax law.
Tiemann said the additional half-cent is one tool to provide help to the county.
"I think it's important for us to try to work with the tools we are given from the state and continue to build relationships with legislators and other members of the unicameral, trying to form some type of relief for the county. I don't think any of us want to raise taxes on anything. We have to look at a judgment that needs paid. We're not on the decision committee, whether we should or should not pay the judgment. We're on the how to fund it, committee".
Supervisor Terry Jurgens says one upside to the additional half-cent is that farm repairs are still exempt from sales tax…although new equipment purchases are not.
Tiemann says if the county doesn’t get the entire judgment paid off by January 2027, the tax expires anyway because of the sunset provision in the law.
Nebraska legislators passed the bill allowing the use of the half-cent sales tax only to pay federal judgments exceeding $25 million. Lawmakers overrode Governor Pete Ricketts’ veto of the bill in this year’s session.