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Senators negotiated over the weekend and until the very last minute but could not reach a consensus on tax relief measures. There were basically 4 proposals before the Legislature dealing with tax relief this session. They were as follows:
LB 947 was the Governor’s proposal to reduce income and property taxes. As amended by Revenue Committee amendments, it created a refundable income tax credit for homeowners, starting at 1% of property taxes paid and increasing to 20% by 2030. A cap was placed on the maximum amount of credit, beginning at $25 and increasing to $500 per year. The refundable income tax credit for agricultural landowners would begin at 2% of property taxes paid and increase to 20% by 2027. No cap was proposed for agricultural landowners. LB 947 reduced the highest corporate income tax rate from 7.81% to 6.84% over a five-year period. The top individual income tax rate reduction was eliminated by the committee amendments. Finally, the committee amendments proposed an appropriation of $5 million annually for the Job Training Cash Fund. Funding for the first year would be from the cash reserve whereas funding for future years was not specified. This bill advanced from the Revenue Committee and was discussed for several hours but no vote was taken, as it did not have the 33 votes needed for a cloture motion to stop the filibuster.
LB 640 would limit the amount of property taxes to fund local school districts to 55% and would lower the maximum property tax rate a district could levy from $1.05 to $0.987. The intent was to shift more of the burden to the state income and sales taxes to fund our K-12 schools. The Property Tax Credit Fund would be used to fund the proposal initially. LB 640 was advanced from the Revenue Committee last year, prioritized both years, but never came to a vote on advancement by the full Legislature.
LB 1103 would provide a minimum funding level of state aid to school districts equal to 25% of their basic funding calculated for the district. The intent was to provide some foundation aid to every school district, regardless of whether the district qualifies for equalization aid under the current school finance formula. Under the current state aid formula, 179 of Nebraska’s 245 school districts receive no equalization aid, most of which are in rural areas, thereby requiring property taxes to primarily fund K-12 education. No funding source was indicated to pay for the foundation aid. The Revenue Committee advanced LB 1103 last month. Again no vote was taken on advancement by the full body. I had worked hard on trying to get this bill amended into LB 947, as I felt it would strengthen the bill, but could not garner enough support.
LB 1084, as amended, would fund a 30% allocated income tax component of the school finance formula. When TEEOSA was originally crafted, it directed 20% of income taxes paid by residents to the district, but this has since been reduced to 2.3% over the years. It would also offer $500 of per pupil aid to each public school, regardless of whether they qualify for equalization aid. The proposal would increase state reimbursement for special education from 45% to 61.5% and restore cuts passed last year in state aid to schools. The Earned Income Tax Credit would increase from 10% to 15% of the federal credit and any remaining dollars would increase the funding going to the Property Tax Credit Fund. The proposal would place a cap on the amount of property taxes a school district could collect. If state school aid increased, a school would have decreased ability to collect property taxes. To fund the legislation, the sales tax rate would be increased by 1 cent, the cigarette tax by $1.50, a surcharge would be applied to the state’s highest earners, the alternative minimum tax would be reinstated, and the personal property tax exemption would be eliminated. LB 1084 is still being held in the Revenue Committee, however it was offered as an amendment to LB 1103.
I am disappointed that an agreement could not be reached. The Governor and some senators would not support any type of tax increase or tax shift to fund property tax relief. Other senators felt it was irresponsible to provide for tax relief without identifying how it would be funded. Some senators and the governor strongly supported income tax relief, whereas other senators prioritized property tax relief. I supported the concept of foundation aid, which would lessen the burden placed on property taxes to support our K-12 schools. With the divided opinions, none of the proposals garnered the necessary 33 votes to allow for a vote on advancement of the legislation. I was also frustrated that my priority bill did not pass. LB 44 would have allowed the state to require out-of-state online retailers to collect sales taxes immediately, should the Supreme Court overturn an outdated ruling this summer. Considering the Legislature had to make substantial cuts again this year, I felt that it was irresponsible to not take advantage of this potential source of revenue, which has been estimated to be as high as $65-$95 million annually.
This leaves us with the pending petition drive, which is similar to LB 829, a bill stuck in the Revenue Committee. This proposal would enable property owners to get a refundable income tax credit equal to 50% of the portion of their property tax bill that goes to fund K-12 education. Since property taxes for K-12 schools is approximately 60% of a property tax bill, the proposal would represent an estimated 30% reduction in property taxes. The proposal would result in lost state revenue of approximately $1 billion and neither the petition nor the legislation specifies a funding source. The total budget for the state is approximately $4.4 billion.
The Legislature did protect the current tax relief measures that have been put in place over the last 12 years, such as the Property Tax Credit Program, personal property tax exemptions, and indexing income tax brackets for inflation, which provide approximately $700 million of tax relief annually. However, I will not give up on working for property tax relief.
Three of the bills that I introduced this session were passed by the Legislature in the past week. LB 745 would help cities plan for local option sales tax refunds. LB 861 would help Johnson County with prosecution costs arising from incidents at Tecumseh State Correctional Institution, if they reach a certain level. Finally, LB 980 would allow 12-foot wide loads of hay bales on the Interstate, as is currently allowed on state highways.
This past week has seen some progress and some setbacks. On the positive side, the Legislature passed the budget bills. Although the Governor has the authority to line-item veto specific items in the budget bills, he signed the bills with no vetoes.
There were several bills that were discussed for three hours but will not appear on the agenda again. The Speaker of the Legislature’s policy is to debate a controversial bill for three hours. If the sponsor can show him that there are 33 votes in support, which is enough to end a filibuster, then the bill will again be placed on the agenda. Among the bills failing to garner 33 votes was LB 389, introduced in an attempt to modernize Nebraska’s telecommunications statutes to allow for greater investment by small wireless communications providers in new technologies. Opponents argued that this bill would primarily benefit urban areas and not rural areas with the greatest need for better service. Proponents couldn’t reach a compromise with municipalities on the fee structure.
A bill which may resurface is LB 989. It proposes to allow the City of Lincoln to conduct pilot projects involving the testing of autonomous vehicles. Autonomous vehicles can include vehicles without drivers, steering wheels, brake pedals or accelerator pedals.
LB 791 was one of two bills introduced as part of the Governor’s Initiative to ensure accountability and transparency in the Nebraska State Patrol after problems surfaced last year, resulting in the firing of the State Patrol Superintendent. As amended, the original language eliminating sergeants of the Nebraska State Patrol from the law enforcement collective bargaining unit and removing the requirement for the Attorney General to defend Nebraska State Patrol troopers against criminal actions was stricken from the bill. The measure requires a department’s commander to file reports with the Nebraska Crime Commission on officers who are fired or quit for incompetence, dishonesty, crimes, or violation of their professional oath, thereby giving the Crime Commission and law enforcement agencies more information when making decisions on hiring, in an effort to prevent less-than-reputable officers from finding employment at different locations. The amendments also allow employees to file harassment complaints with the State Department of Administrative Services rather than with their own agencies. This bill may be discussed again if concerns can be resolved.
LB 1058 proposed rules and procedures to guide a delegation to an Article V Convention of the States. Aimed at relieving fears of a “runaway convention”, opponents still questioned whether that is possible. Although I voted in support of it, LB 1058 failed to receive 25 votes for advancement. A cloture motion was taken on LR 1, which is a constitutional amendment that would have required voters to present identification prior to voting. The cloture motion failed by 9 votes.
LB 902 would provide an additional exemption to the public records statute for information obtained by a government entity regarding firearm registration, possession, sale or use. LB 902 received first-round and second-round approval this past week. LB 807, which would replace the statues of J. Sterling Morton and William Jennings Bryan with statues of Willa Cather and Chief Standing Bear in the U.S. Capitol, received first-round approval. These statues have been in place for more than 80 years. In 2000, Congress allowed states to replace the statues with new ones. There would be no state funding involved and the money raised for the new statues would also have to pay the expenses related to the removal and transportation of the replaced statues.
After two failed cloture votes, a third was successful and the budget bill advanced to Final Reading. A group of senators worked for three days on a compromise amendment on the Title X language. Although federal law already prohibits the use of Title X funding for abortions, the language in our budget bill went further, disallowing entities that refer for abortion from receiving the federal funds. Some senators wanted to make sure that the language did not disqualify federally qualified health centers from receiving such funds, as they offer needed health services to low income women and men across the state. The compromise amendment limits referrals for abortions to emergency situations and allows neutral, factual, nondirective information about pregnancy termination.
LB 729, a bill that I co-sponsored, was given first-round approval this past week. Current law requires the Department of Health and Human Services to provide adopting parents with all available medical history on the child. However, last summer the Nebraska Supreme Court ruled on a case in which the parents were not told that the foster child had a sexual abuse history and he later abused their young son. The parents sued the state but the court ruled that there was no recourse because of the state’s immunity under the “misrepresentation or deceit” exception to the State Tort Claims Act. Other states have ruled that a state was only immune under the misrepresentation and deceit exception to the State Tort Claims Act when it involved a financial transaction. The Nebraska Supreme Court ruling suggested that the Legislature could expand the scope of the state’s liability by limiting the application of the misrepresentation exception to claims arising from commercial transactions.
An attorney from my district, representing a couple that experienced a similar situation, contacted me about the Supreme Court ruling and I began working with other senators on this legislation. In this case, the couple specifically stated in their home study that they were not willing to take a high-risk or high-needs child, but were placed with a child diagnosed with Reactive Attachment Disorder, among other things. The paperwork they received at the time of placement contained areas to list his medical providers, psychiatrist and therapist. All were marked with “NONE”, even though he was regularly seeing a psychiatrist and mental health therapist. Therefore, his treatment was abruptly stopped because the adoptive parents weren’t aware of it. The family tried to help their son but doctors had to start from ground zero on his care. Their son has since been placed in residential care out of state after he threatened to kill his adoptive mom. Had HHS been truthful, this could have been avoided. Their son would not have been deprived of appropriate and necessary medical treatment. He would have been placed with a family who had the resources and skills to help him. The family’s other children would not have had their lives upended, but would have continued to grow up in a peaceful and safe home. Now they are growing up without their brother and all are grieving. The adoptive mom flew across the country to testify at the public hearing on LB 729. Although she realized that this bill would not help her situation, she hoped that her testimony could prevent this from happening to another family.
LB 729 provides that the State Tort Claims Act shall apply to a claim arising out of misrepresentation or deceit by the Department of Health and Human Services if they fail to inform prospective adoptive parents of a state ward’s mental, behavioral and medical health history. I think it is imperative that HHS is held accountable for disclosing all available information to perspective adoptive parents. It does not make sense to have a law mandating caseworkers to disclose medical histories and then shield them when they intentionally or negligently fail to do so.
Senators were informed last week that the Department of Health and Human Services and the Attorney General were in the process of petitioning district judges in 19 counties to place 21 nursing facilities and 10 assisted living facilities owned by Cottonwood Healthcare LLC, known as Skyline, headquartered in New Jersey, in receivership. DHHS had just been informed that the company was not able to meet its payroll and determined that receivership proceedings for uninterrupted operation of the facilities were necessary to protect the health and welfare of the residents of these facilities. Later that day, a Lancaster County judge signed the order, which appointed Klaasmeyer & Associates to manage the facilities while a long-term plan is worked out. If necessary, the Center for Medicare and Medicaid Services has authorized the use of Civil Money Penalty funds for the nursing facility operations to ensure the safety and well-being of residents. The affected facilities include Nebraska City Care and Rehabilitation Center. I am concerned about the employees, as well as the residents, and am looking into this situation. An interim study resolution has been introduced, asking the Appropriations Committee, of which I’m a member, to study the underlying issues contributing to the financial hardship experienced by rural long-term care providers across Nebraska.
An amended version of the Governor’s proposal for tax relief was advanced from the Revenue Committee with a 5-3 vote on the 46th day of this 60-day legislative session. LB 947, as amended by Revenue Committee amendments, proposes to create a refundable income tax credit for homeowners and agricultural property owners equal to a percentage of property taxes paid. For homeowners, the credit would begin at 1% of property taxes paid this year, increasing to 20% by 2030. A cap is set on the maximum credit amount each year, beginning at $25 and increasing to $500. For agricultural landowners, the credit will begin at 2% of property taxes paid and increase to 20% by 2027, with no cap placed on the maximum amount of the credit. The proposal would also reduce the highest corporate income tax rate from 7.81% to 6.84% over a five-year period and provides $5 million in funding annually for job training. LB 947 retains the Property Tax Credit Fund, created by the Legislature more than 10 years ago, and the Personal Property Tax Relief Act, just recently passed by the Legislature, exempting the first $10,000 of tangible personal property value. The Property Tax Credit program is funded with a $224 million annual appropriation and appears on tax statements as a credit after full taxes are levied.
It is estimated that the Governor’s proposal would cost approximately $50 million the first year, increasing to more than $600 million in 2030. The funding for the first year comes primarily through a transfer from the state’s cash reserve fund. The legislation does not address how the tax relief in future years would be funded.
LB 1009, pertaining to speed limits, received first-round approval this past week on a 35-2 vote. Prior to the advancement of the bill, an amendment was adopted that struck the language authorizing a 5 mph increase in the speed limit on the Interstate. Under LB 1009, the maximum speed limits would increase from 60 to 65 mph for two-lane highways and from 65 to 70 mph for super 2 highways (with passing lanes), freeways, and expressways. The higher speed limits are supported by a statistical method used by traffic engineers, which determines the speed at or below which 85% of vehicles travel. This is considered the proper speed limit for the roadway. The Department of Transportation may set a speed limit that is lower than the maximum, based on an engineering and traffic investigation considering traffic volumes, road design and other engineering considerations, such as crash data. County boards, cities, and villages have this same authority on roads under their jurisdiction.
After receiving initial approval from the Legislature on March 13, the budget was discussed at the second stage of debate this past week. Due to the controversy over the Title X language contained in LB 944, a cloture motion failed earlier in the week and was taken up again later in the week. However, the cloture motion again failed. The Legislature will now have to suspend their rule requiring the budget bills to be passed by the 50th day of a 60-day session, which falls on March 27th this year. A cloture motion is required to cut off debate on an issue that is the subject of a filibuster. A successful cloture motion requires 33 votes and allows for a vote to be taken immediately on the advancement of the legislation. Researchers could only recall three times when the budget has required a cloture vote – twice last year and in 1995.
Title X dollars are given to federally qualified health centers, providing such services as contraceptives, cervical cancer screenings, and testing and treatment for sexually transmitted diseases for low income women and men. Planned Parenthood currently qualifies for Title X funding, which is the basis for the controversy.
Last week, my cloture motion on LB 44 failed by two votes. LB 44 would have authorized our state to require out-of-state online retailers to collect sales tax, if the Supreme Court overturns an outdated ruling as predicted this summer. This means our state won’t begin collecting such revenue until legislation can be introduced and passed next year, resulting in the loss of tens of millions of dollars in tax revenue. It baffled me that more than a dozen senators objected to this.
The Nebraska State Capitol is in the process of a major Heating, Ventilation and Air Conditioning (HVAC) Replacement Project. When the Capitol was built (1922-32), the architect, Bertram Goodhue, used steam radiator technology to heat the over 100,000 square feet of the stone structure. The steam was generated at the University of Nebraska’s power plant and brought to the Capitol via a mile long tunnel. In the 1960s the original system was modified to also accept chilled water from the University so that offices could be cooled in an attempt to make summers more comfortable. Over the years, the radiator technology began to have multiple operational problems. The Legislature addressed the problem by appropriating funds to replace the system, and in 2016, the Office of the Capitol Commission began the ten-year HVAC project. The project is intended to incorporate the best of the old system with the latest technology.
First, there was a two-year planning phase, which is nearly complete, and we will soon move to the eight-year construction phase. There will need to be extensive work done inside the Capitol building that will begin this summer. This will require contractors to remove outdated ducts and pipes, resulting in major demolition and reconstruction work. All areas of the Capitol will have to be vacated at some point.
As chairperson of the Legislature’s Executive Board, I have worked with the Executive and Judicial branches of government to plan for the impact of the construction on government offices within the Capitol and their relocation. We determined that the most efficient way to proceed is to vacate a quarter of the building at a time, resulting in a five-phase project. This approach will allow the Capitol to continue to function on a daily basis as the seat of State Government.
For Legislative offices, the plan provides that all senators and his or her staff will have office space in the Capitol throughout the project. However, their offices will be temporarily relocated at some point, with some being relocated for more than one phase. Legislative support functions, including the Clerk’s Office, the Fiscal Office, the Bill Drafting Office, the Legislative Research Office, and the Accounting Office will also be relocated to different areas within the Capitol. The support offices that will be located outside the Capitol for the duration of the project are the Ombudsman, Transcribers, and Performance Audit. Following adjournment of the Legislature on April 18, 2018, senators’ offices in the southwest quadrant of the Capitol will be the first to be vacated and moved.
The plan also ensures that the Legislature can continue to meet in the George Norris Legislative Chamber during session and that all public hearings on legislation will be held in hearing rooms within the Capitol.
The next visible phase of the HVAC project will be construction of the well field for the ground-source heating and cooling system. A state surface parking lot near the Capitol will become a geothermal well drilling site on June 1, 2018. The construction of the well field is expected to take 15 months. The work on the Capitol grounds will become visible through a combination of open trenching and directional boring.
The HVAC project is complicated, especially in a building of the age and size of the Capitol. However, everyone involved in the project is committed to preserving the integrity of our beautiful State Capitol. As noted by the Nebraska Capitol Commission in 1935: “It is difficult for Nebraska to realize what it has done, but the people of your nation know, and they look to you for careful preservation of what has become a jewel among Historic Monuments.”
As we begin the final weeks of this legislative session, I encourage you to contact me with your thoughts and opinions. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is firstname.lastname@example.org and my telephone number is (402) 471-2733.
The Appropriations Committee, on which I serve, voted unanimously to send the main budget bill to the full Legislature. The two other bills that are part of the budget package, dealing with the cash reserve and funding transfers, were advanced on an 8-1 vote. Debate on the budget will begin Tuesday, March 13. The $8.8 billion budget for the biennium represents an average spending growth of just 0.5% over the two year period.
At the end of the 2017 session last May, the Legislature passed a balanced budget for the upcoming two fiscal years. Since that time, increases in child welfare costs, a lower than expected federal Medicaid match rate, and a significant reduction in revenue forecasts last October resulted in a budget shortfall of approximately $200 million. In his budget recommendations in January, the Governor proposed across-the-board reductions of 2% for the current fiscal year and 4% for next fiscal year. Primarily due to increased revenue projections from the Nebraska Economic Forecasting Advisory Board last month and use of the cash reserve fund, the Appropriations Committee was able to reduce the proposed cuts for next year from 4% to 2% for most state agencies and to 1% for higher education.
The budget figures are based on the passage of LB 1090, which received first-round approval this past week from the Legislature. Nebraska’s income tax system is linked to the federal income tax system. Consequently, the passage of the federal Tax Cuts and Jobs Act would have resulted in an increase of revenue for our state. LB 1090 changes Nebraska’s tax codes by restoring the state’s personal exemption tax credit to offset income gained from the federal tax changes and thereby eliminate any resulting tax increase to Nebraska taxpayers.
Although the cash reserve is left with a nearly $300 million balance, this is notably lower than several years ago. Even though the purpose of the cash reserve or “rainy day” fund is to help in years of budget difficulties, senators will need to work in future years to replenish this fund.
My priority bill, LB 44, received second-round approval this past week. This legislation would put Nebraska in a position to start collecting sales tax from remote on-line sellers, should the Supreme Court overturn a dated ruling stating that companies must have a physical presence in the state to be required to collect the sales tax. States are losing out on millions of dollars of revenue that is owed by the purchaser (if not collected by the seller), but is seldom paid.
LB 861, an Appropriations Committee priority bill, received first-round approval from the Legislature this past week on a 27-0 vote. It would require the state to pay for costs of prosecution in counties with state correctional institutions if such costs exceed a certain threshold. I introduced this bill in an effort to provide a safety net for Johnson County residents, to ensure that if costs associated with incidents occurring at the Tecumseh State Correctional Institution get too high, the state will pitch in and help with the costs.
Legislation received first-round approval this past week that would strengthen the car safety seat requirements for the first time since 2002. Current law requires any child up to 6 years of age to be secured in an approved child safety restraint device. LB 42 would increase the age limit from “up to 6 years” to “up to 8 years”, would require children up to 2 years of age to use a rear-facing device, and specifies that the car seat should be placed in the rear seat of a vehicle, when possible. The American Academy of Pediatrics has recommended that all infants and toddlers ride in a rear-facing seat until they are at least 2 years of age, as they are significantly less likely to be seriously injured in a crash than if forward-facing.
As the Legislature begins debate on the budget and other bills, I again encourage your input on issues before us. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number at the Capitol is (402) 471-2733.
The Nebraska Economic Forecasting Advisory Board met this past week and raised revenue projections by approximately $55 million over the previous tax revenue forecast last October. Of that amount, the $25 million increase forecasted for this fiscal year, will be directed into the cash reserve fund. For next fiscal year, the Legislature will have $30 million more to work with in balancing the budget. Considering that the biennial budget is $9 billion, this isn’t a huge change, however it did give the Appropriations Committee some leeway when considering the 2% and 4% across-the-board cuts proposed by the Governor for most state agencies and programs. Rather than 4% cuts for fiscal year 2018-19, the committee has tentatively approved reductions of 1% for higher education and 2% for most state agencies.
The forecasting board also raised projections by $335 million due to the impact of the federal Tax Cuts and Jobs Act (TCJA) on Nebraska taxpayers. The TCJA eliminated the personal exemption and raised the standard deduction. The personal exemption is a tax credit each taxpayer can claim on their taxes for themselves and each of their dependents. Since the state level personal exemption credit is tied to the federal personal exemption, the state credit would be eliminated resulting in taxpayers owing more in state taxes. LB 1090 would restore the state level personal exemption credit and thus eliminate any increase in state revenue. LB 1090 has been designated as a Revenue Committee priority bill and will be discussed in the near future by the Legislature.
LB 841, a committee priority bill, was advanced from the Judiciary Committee this past week. The committee amendments incorporate a number of bills that are meant to improve policies and procedures related to Nebraska’s criminal justice system.
According to current law, the Governor “may” declare a correctional system overcrowding emergency whenever the inmate population is over 140% of design capacity. However, beginning July 1, 2020, if the inmate population is over 140% of design capacity, a correctional system overcrowding emergency exists. This will require the Board of Parole to immediately consider committed offenders who are eligible for parole and order the release of such offenders, unless the Board determines that the offender will not conform to the conditions of parole, will have a very significant effect on institutional discipline, or has a very substantial risk of committing a violent act. Currently, the state’s prisons are at approximately 156% of design capacity.
LB 841, introduced by Senator Patty Pansing Brooks, seeks to prepare for this mandate by requiring the Department of Correctional Services and the Nebraska Board of Parole to develop a plan describing the process to implement the accelerated parole review while ensuring public safety. This plan, to be submitted to the Legislature by December 1, will also determine if additional legislation or funding is necessary.
Legislation amended into LB 841 would ask the Department of Correctional Services to complete a comprehensive analysis of its system-wide staffing needs. Having a complete picture of the staffing situation is essential to the department’s long-term planning efforts and will assist the Legislature in making funding decisions. The committee amendments transfer the authority to conduct criminal investigations relating to conduct occurring within correctional facilities from the department to the Nebraska State Patrol. Another provision would allow an inmate to leave a facility, under certain conditions, to participate in community-based substance abuse or rehabilitative programming or treatment. It would also allow an inmate diagnosed with a terminal illness to be granted medical parole. The committee amendments allow for the continuation of the current practice of the state contracting with counties to house inmates in county jails. The amendments also require the Board of Parole to provide the department and the inmate with notice when parole has been deferred, listing the reasons and any recommended programming or treatment that the inmate should complete to enhance his/her likelihood of being granted parole. Furthermore, the committee amendments create the Coordinated Reentry Council, tasked with furthering the state’s efforts to establish a comprehensive and successful system of correction reentry programs throughout the state.
The Appropriations Committee will advance the budget to the full Legislature next week and the body will begin discussing it on March 13. Balancing the budget is the Legislature’s primary responsibility. As we discuss the budget and other legislation, I encourage you to contact me with your thoughts and opinions. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My telephone number is (402) 471-2733 and my email address is firstname.lastname@example.org.
Priority bill designation for the 2018 legislative session has taken place. After this point, generally only bills and resolutions that have been prioritized are placed on the agenda. Every senator is allowed to designate one priority bill, committees are allowed to designate two, and the speaker can designate 25 speaker priority bills.
I designated LB 44 as my priority bill. Under proposed amendments, LB 44 would adopt the Noncollecting Retailer Notice and Reporting Act. The Supreme Court ruled years ago that retailers who didn’t have a physical presence in the state were not required to collect the state’s sales tax. South Dakota passed legislation meant to challenge this ruling and the U.S. Supreme Court should issue its opinion by June.
LB 44 would require out-of-state retailers that don’t collect sales tax to meet reporting requirements if their total sales to Nebraska purchasers exceed $100,000 or amount to 200 or more transactions. The reporting requirements are meant to be onerous, thereby encouraging retailers to voluntarily submit the sales tax. Furthermore, LB 44 would require such retailers to collect sales tax upon the overturning of the previous Supreme Court case or July 1, whichever is later. Therefore, if the Supreme Court ruling is overturned in June, this legislation would allow Nebraska to begin collecting sales tax on online purchases beginning July 1. It has been estimated that our state is losing out on tens of millions of tax dollars, which are currently owed by purchasers, but few pay.
The Appropriations Committee chose LB 861 as one of their two priority bills. LB 861 would require the state to pay a county’s prosecution costs arising from a single correctional institution incident that exceed 2 ½ cents of the county’s levy. I introduced this bill to offer assistance to Johnson County residents, whom must foot the bill for the cost of prosecuting the crimes associated with several incidents at TSCI. I do not think it is fair that the county is responsible for the costs to defend inmates from across the state, just because the correctional institution is located within the county. This bill could be seen as a catastrophic insurance policy, requiring the state to help the county with prosecution costs when they become an extreme hardship for county residents.
The speaker revealed that he received 72 requests for the 25 speaker priority bill designations. He did indicate that his personal priority bill was among those requested for speaker priority designation. My request for LB 745 was granted. LB 745 deals with the refund of local option sales tax in situations when sales or use tax has been overpaid and must be refunded due to an error in collection or computation. I introduced it at the request of Nebraska City officials, as it will help municipalities plan for such occurrence.
Several bills pertaining to tax relief were designated as priority bills. LB 829, prioritized by Senator Steve Erdman, would provide for a refundable income tax credit equal to 50% of the portion of taxes directed towards K-12 education, resulting in an approximate 30% reduction in property taxes. The Revenue Committee has not advanced LB 829 and Senator Erdman has indicated that he may try to pull it from committee, which would require an affirmative vote by the majority of the Legislature.
LB 947, the governor’s proposal for income and property tax relief, was selected by Senator Jim Smith, the chair of the Revenue Committee, as his personal priority bill. However, this bill still remains in the Revenue Committee as well. As introduced, it proposes a 10% refundable income tax credit of property taxes paid, which would increase if actual general fund receipts were above estimated receipts. The top rate for individual income taxes and corporate income taxes would be reduced to 6.69%. Furthermore, $10 million would be appropriated for job training.
LB 1084, prioritized by Senator Tom Briese, would significantly increase the amount of funding for the Property Tax Credit program, as well as increase funding for K-12 education. To fund the proposal, the legislation proposes to increase the sales tax by ½ cent, increase the cigarette tax by $1.00, eliminate various sales tax exemptions, and impose sales tax on more services. LB 1103, selected by Senator Curt Friesen, seeks to provide a minimum amount of state aid to every school district. LB 640, designated as a priority by Senator Mike Groene, reduces the maximum levy for school districts from $1.05 to $1.00 and limits the amount of property taxes that fund local schools. LB 1084 and LB 1103 remain in committee, while LB 640 is on General File.
The public hearing process will conclude on February 27 and the Legislature will begin full day sessions on February 28. I encourage you to contact me with your thoughts and opinions on legislation before us. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number is (402) 471-2733.
Tax reform was recently enacted on the federal level. Because Nebraska’s state income tax is tied to the federal tax code, the Nebraska Department of Revenue estimated that the state would experience an increase in state revenue of more than $200 million. In order to compensate for the effects of the federal tax changes so that taxpayers are not faced with a state tax increase, two bills were introduced to adjust Nebraska’s tax code.
LB 1090, introduced by Papillion Senator Jim Smith, the chair of the Revenue Committee, would restore the $134 personal exemption credit that was effectively eliminated by the federal Tax and Jobs Act and would establish a Nebraska standard deduction, ranging from $6,750 for single filers to $13,500 for married couples filing jointly. The legislation also retains the current method used to index for inflation, rather than using the federal method which grows somewhat more slowly.
LB 1048, introduced by Omaha Senator Burke Harr, also preserves the personal exemption on the state level. However, only individuals with income of no more than $100,000 and married couples filing jointly with income of no more than $200,000 would qualify. A public hearing before the Revenue Committee was held last week on both bills. At this time, the committee has not taken action on either bill.
This past week, I introduced LB 861 before the Appropriations Committee. It would require the state to pick up the costs of prosecution for a single incident occurring in a state correctional institution, such as the Mother’s Day riot, once costs exceed the threshold amount for a county. The legislation sets the threshold amount at 2 ½ cents per $100 dollars of taxable valuation, meaning that for Johnson County, the state would pick up costs in excess of approximately $225,000. It does not seem fair for counties, particularly smaller counties such as Johnson County, to have to bear the exorbitant defense costs that could arise for an incident at a state correctional facility, when the inmates charged with crimes are from throughout the state and none are originally residents of the county. A Johnson County Commissioner testified in support of LB 861 and another commissioner, as well as the county attorney, submitted letters in support.
The Appropriations Committee held a public hearing on the budget for the University of Nebraska this past week. The room was packed with University supporters who testified for more than 4 hours against the 2% and 4% across-the-board cuts, as proposed by the Governor. The cuts would amount to an additional $11.5 million reduction in funding for the current fiscal year and $23 million next fiscal year, on top of previous cuts already imposed on the University. The University has argued that they receive 13% of the state’s general fund, but their cuts amount to 34% of the total cuts proposed by the governor on state government. This is because some agencies, such as Corrections, were held harmless from cuts this biennium. Therefore, the agencies receiving cuts were treated equally.
Earlier this week, the University announced $9.2 million in potential cuts that could become reality if the governor’s proposal is adopted by the Legislature. The cuts include reducing the Rural Futures Institute, closing the Haskell Ag Lab in Concord, eliminating electronics engineering, art history, and geography majors at UNL; eliminating Monroe-Meyer Institute developmental neuroscience division programs and the master of forensic science program at UNMC; eliminating the Career Development Office in the College of Business at UNO; and eliminating men’s tennis, golf and baseball at UNK. Testifiers at the hearing feared that if the University increased tuition further than already recommended, it could make college unaffordable for some students.
High school students interested in government are encouraged to register for the 2018 Unicameral Youth Legislature, which will be held June 10-13. The 4-day legislative simulation is conducted at the State Capitol. Student senators will sponsor bills, conduct committee hearings, debate legislation and learn about our unique unicameral. Registrants are encouraged to apply for a Speaker Greg Adams Civic Scholarship award, which covers tuition. More information can be found at www.Nebraskalegislature.gov/uyl.
Again, I’d like to encourage your input on issues before the Legislature. I can be reached at firstname.lastname@example.org and my telephone number is (402) 471-2733. My mailing address is District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509.
The Appropriations Committee presented their Preliminary Budget Report to the Legislature this past week. Basically, it contains the Governor’s proposed changes for the current biennium, primarily composed of a 2% and 4% across the board reduction to the current biennial budget in order to address the $173 million budget shortfall. The committee is in the process of hearing testimony on the impacts and ramifications of these reductions, prior to making any final decisions.
The Nebraska Economic Advisory Board will meet on February 28 to review the existing forecast, based on the impacts of the federal tax changes, as well as any changes due to economic conditions and revenue performance. By the 1st of March, the Appropriations Committee will finalize their budget proposal, using the input obtained from the budget hearings and any updated revenue forecasts from the Advisory Board.
The public hearing was held this past week before the Transportation and Telecommunications Committee on LB 1009, which proposes to increase the maximum speed limit on various highways.
The bill was introduced by Senator John Murante and was brought to him by the director of the Nebraska Department of Transportation. At the public hearing, the director of the NDOT explained that in 2015, the State Highway Commission asked the department to begin an examination of the speed limits on 2-lane state highways that were posted at 60 miles per hour. The department gathered information on approximately 4,000 miles and found that 75% of the study locations recommended an increase from 60-65 mph based on driver expectations and actual usage. Furthermore, the department annually conducts speed studies on segments of expressways, freeways, and the Interstate.
The director explained that doing these studies on a segment-by-segment basis is rather inefficient when many of the roads being examined are fundamentally the same when it comes to an engineering and design perspective, yet some are posted at 60 mph and others at 65 mph. Therefore, LB 1009 was introduced to bring consistency and uniformity to the system.
The proposal is supported by the 85th Percentile Principle. Under this method, engineers monitor the speed of traffic and consider the speed at or below what 85 percent of vehicles travel as a proper speed, while also taking into consideration traffic volumes, roadway geometry, existing traffic control devices and crash data.
Although LB 1009 allows the department to raise the speed limit from 75 to 80 mph on the Interstate, this change would only be made if the results of an engineering study deem it appropriate. Such study has not been completed at this time.
Opponents stressed that speed is a factor in an increased number of accidents and the severity of accidents. Safety advocates testified that research has shown that fatalities increase by 4% on highways and 8% on Interstates and freeways for each 5 mph increase in the speed limit. Representatives of the trucking industry noted that it takes a loaded semi two football fields to stop at 65 mph. It was estimated that if the speed limit were to increase by 5 mph on the Interstate, a commuter from Lincoln to Omaha would save approximately 2 minutes.
In his budget recommendations contained in LB 944, Governor Ricketts revised the distribution of federal Title X healthcare funding to prevent the use of taxpayer dollars for abortions and abortion-related services. Although the restriction on taxpayers’ dollars being used to fund abortions is already in law, the governor’s proposal would also prevent a provider from receiving Title X funding if they refer or provide directive counsel for abortions.
The public hearing lasted almost 7 hours, with testimony heard from those in support and in opposition to the revision. Title X funds are used to pay for contraceptives, cervical cancer screenings, testing and treatment for sexually transmitted diseases and related services for lower income men and women. Although some said that clinics, such as Planned Parenthood, could still be eligible for Title X funds, others questioned this, as Title X clinics are required to provide abortion information when requested, which could jeopardize their funding. More than 55,000 people visited Title X clinics in 2016 and opponents worried that if such clinics closed, other providers may not be available to offer such services.
As the Legislature proceeds with floor debate in the mornings and public hearings in the afternoons, I encourage you to contact me with your thoughts on the legislation before us. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My telephone number is (402) 471-2733 and my email address is email@example.com.
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