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Governor Pete Ricketts gave his annual State of the State address this past week. His recommendations, along with the agency requests, will become the starting point as the Appropriations Committee, and then the entire Legislature, determines what mid-biennium budget adjustments need to be made.
To address the lowered revenue forecast projected by the Nebraska Economic Forecasting Advisory Board this past October, the Governor is proposing across-the-board cuts of 2% this fiscal year and 4% next year, as well as specific reductions. He has also recommended transfers of excess fund balances to the General Fund and a $108 million transfer from the cash reserve fund. These budget reductions come on top of significant cuts made last year when the state experienced a budget shortfall in excess of $1 billion. The Governor stressed that the budget was balanced last year without any tax increases, and his recommendations propose to do the same this year.
The Governor stated that the priorities in his budget include funding for K-12 education, Corrections, and services for those with developmental disabilities. He proposed to maintain funding for state school aid and included an additional $35 million to Child Welfare and Public Assistance for this year and next, after noting the 9% increase in the number of children in our child welfare system. He also mentioned the formation of a new child welfare task force to determine the root causes for this increase, such as the high number of parents using methamphetamine. The Governor recommended expanding the number of corrections officers and reinvesting $6 million to expand bed capacity in our prisons.
Growing Nebraska has always been one of the Governor’s top goals, and he emphasized that cutting and reforming taxes is a key factor in meeting this goal. Although the state has provided $840 million in property tax relief over the past four years, the Tax Foundation ranks Nebraska’s property taxes as 11th highest in the nation. Therefore, the Governor stressed that property tax relief was a top priority. To that end, he announced that Revenue Committee chair, Senator Jim Smith, will introduce the Nebraska Property Tax Cuts and Opportunity Act.
LB 947 contains three major components. First, it would eliminate the current Property Tax Credit Program which provides property owners a tax credit based on the valuation of their property and is shown on tax statements as a credit after full taxes are levied. It also proposes to eliminate the recently passed Personal Property Exemption Program. The legislation would use the funding from these two programs for a refundable credit on state income taxes for property taxes paid, which would ensure that Nebraskans, not absentee landowners, receive the credit. It also includes a trigger mechanism to provide for additional property tax relief in future years when actual tax receipts are higher than forecast projections. Next, the legislation permanently reduces the top individual and corporate income tax rate from 6.84% and 7.81%, respectively, to 6.69%. As I understand, the funding from the elimination of the Property Tax Credit Program and the Personal Property Exemption Program would also be used to fund the income tax rate decreases. Finally, the legislation provides an additional $10 million for workforce development.
Senators have been meeting in full day debate this past week, but will begin meeting only in the mornings starting January 16, as public hearings on every bill introduced will be held in the afternoons. January 18, the 10th day of the legislative session, is the last day that bills can be introduced.
I encourage you to contact me with your thoughts and opinions on the legislation that has been introduced. I can be reached at email@example.com. My mailing address is District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509 and my telephone number is (402)471-2733.
Wednesday, January 3rd marked the first day of the One Hundred Fifth Legislature, Second Session. It was the earliest date that the Legislature could convene, as the constitution specifies the beginning date to be the first Wednesday after the first Monday in January. Legislative sessions in even-numbered years last for 60 days. During this session, senators will make any necessary adjustments to the 2-year budget that was set during the 90-day session in 2017.
The Nebraska Economic Forecasting Advisory Board met at the end of October and lowered projected revenue by approximately $224 million, which resulted in an estimated shortfall of approximately $173 million. This has since increased, with the deficit budget request from the Department of Health and Human Services seeking an additional $50 million for higher than anticipated child welfare costs and lower than expected federal funding for Medicaid. Since the Legislature last year faced more than $1 billion in revenue shortfalls, making additional cuts will be difficult.
Due to the resignation of Senator Joni Craighead over the interim, senators welcomed Senator Theresa Thibodeau. She was appointed by Governor Ricketts to fill Senator Craighead’s seat, representing District #6 in Omaha. Since Senator Craighead served as the chair of the Committee on Committees, Omaha Senator Robert Hilkemann was elected by his colleagues to take her place.
Legislative bills that were not indefinitely postponed or passed by the Legislature last year were automatically carried over to this year’s session. More than 450 bills were awaiting senators when they began their work, most of which are still being held in committee.
Even with the projected budget shortfall, many senators are still pushing for tax relief. The Governor is working on alterations to LB 461, which was introduced last year to provide income and property tax relief. It stalled when senators couldn’t reach a consensus on whether property tax relief or income tax relief should be prioritized, while others felt that it was not the right time to discuss tax relief due to the budget situation. I pushed for $10 of property tax relief for every $1 of income tax relief. The Governor’s proposal will be outlined in his State of the State Address on January 10.
This past week, Senator Steve Erdman of Bayard introduced LB 829, which proposes a refundable state income tax credit equal to 50% of property taxes paid to support local schools. It is estimated that this proposal will provide $1.1 billion in property tax relief, however the legislation does not address how the state is to fund it. Likewise, Trent Fellers, with Reform for Nebraska’s Future, has submitted similar language to the Nebraska Secretary of State for an Initiative Petition. If sufficient signatures are gathered, it would be placed on the general election ballot in November for Nebraskans to vote on.
A variety of information on the legislative process can be found on the Legislature’s website, nebraskalegislature.gov. Viewers can read the text of bills introduced, search state laws, find their senator, follow the progress of specific legislation, read the Unicameral Update, and watch the Legislature through live video streaming. I encourage readers to check out this site.
Last year I was elected as the chair of the Executive Board and will continue to serve as chair this year. The Executive Board supervises all legislative services and employees. It is also responsible for legislation involving issues under its jurisdiction.
With the start of session, I will be at the State Capitol on a daily basis. My office is located on the second floor, southwest corner of the State Capitol, Room 2108. I welcome your visit if you are in town. My staff will also be available to assist you, if I am in a meeting. Laura Olson is my administrative assistant/committee clerk. She answers the phone, greets visitors, handles my schedule, and serves as clerk to the Executive Board. Kim Davis is my legislative aide. She works on constituent issues and legislation. Janice Satra is the legal counsel for the Executive Board.
In order to effectively represent District #1, I encourage your input. My email address is firstname.lastname@example.org and my telephone number at the capitol is (402) 471-2733. My mailing address is Senator Dan Watermeier, District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509.
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