Residential water service could become less expensive under a bill advanced from general file April 26.

Legislative Bill 26, introduced by Sen. Justin Wayne of Omaha, would exempt the gross receipts received from the sale, lease or rental of and storage use or consumption of residential water services.

Wayne said the state currently does not tax bottled water. It also exempts water used in manufacturing and agriculture because it is viewed as an “essential input” in those industries.

Sen. Rich Pahls of Omaha supported the bill. He said the cost to the state in lost revenue from other water tax exemptions is more than $40 million a year. The state Department of Revenue estimates that LB 26 would reduce general fund revenue by $4.6 million in fiscal year 2021-22 and $7.8 million in 2022-23.

“This is a fairness issue,” Pahls said.

Columbus Sen. Mike Moser opposed the bill. Municipalities also tax residential water service, he said, and LB 26 could cause cities and towns to look to property taxes to offset the loss of revenue.

“I think a property tax is worse than paying a sales tax,” Moser said. “Little bit by little bit, we’re giving up revenue and we’re not spending less.”

Lawmakers advanced the bill 38-3 to select file.

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