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The Revenue Committee held a public hearing on LB 829 this past week. LB 829 proposes a refundable income tax credit equal to 50% of property taxes paid to support K-12 education. It has been projected that the legislation would result in an approximate 30% reduction in property taxes. The hearing lasted for more than 4 hours, with more proponents testifying than opponents. Supporters included property owners and agricultural organizations. Business organizations and education groups were among the opponents. The same groups that are backing LB 829 are also working on an initiative petition drive to put a similar proposal before voters should the Legislature fail to act on LB 829.
The desperate need for property tax relief was reiterated by many proponents of the bill. Not only are rural landowners seeking assistance, homeowners also are in need of relief. The Tax Foundation has ranked Nebraska #12 in property tax collections per capita.
Much debate at the public hearing focused on how the property tax relief would be paid for. Senator Steve Erdman, of Bayard, the sponsor of LB 829, was adamant that it was not his responsibility to find the revenue. He stressed that it was his duty to focus on the problem and the Legislature would need to determine how it would be carried out.
The Governor is actively opposing LB 829, as it is projected to cost over $1 billion annually, which represents approximately one-fourth of the state budget. His message warns that the state would have to raise taxes in order to lower the property tax, stating that such steep cuts in revenue as proposed by this plan would leave legislators no option but to raise sales and income taxes. The governor stressed that his goal has always been lower taxes overall, not raising one tax to lower another.
Some senators support the broadening of the tax base, by eliminating various sales tax or income tax exemptions, and other support a cigarette tax increase or a sales tax increase to fund property tax relief. The public hearing on the Governor’s proposal to lower income taxes, as well as property taxes, will be held on January 31, also before the Revenue Committee. Due to such different ideas proposed, my concern is that senators won’t agree on one method of offering much needed property tax relief.
LB 780, introduced by Lincoln Senator Patty Pansing Brooks, proposed to ban multiburst trigger activators (bump stocks) and firearm silencers (suppressors). At the public hearing this past week before the Judiciary Committee, she offered an amendment to remove the ban on silencers from the bill.
Senator Pansing Brooks informed the committee that she introduced the bill because citizens need greater protections from mass shootings. She stressed that she is not limiting the ability of citizens to own a gun, but that this bill deals with gun accessories. Bump stocks were linked to the gunman in Las Vegas who shot and wounded many victims at an outdoor concert last year. This device allows semi-automatic rifles to be fired almost as rapidly as automatic guns.
Even though the NRA issued a statement after the Las Vegas shooting stating that they believe the devices designed to allow semi-automatic rifles to function like fully-automatic rifles should be subject to additional regulations, the NRA still opposed LB 780. The representative from the NRA explained that the statement called for a review by the Bureau of Alcohol, Tobacco, Firearms and Explosives on whether the devices complied with federal law. They are supportive of the ATF doing their job, not a ban on bump stocks. Others were opposed as well, as more opponents than proponents testified on LB 780, arguing that the legislation was too broad or it may lead to the banning of additional accessories. Opponents testified that the normal use of trigger activator devices is to modify a gun for competition shooting or used by people with disabilities to assist with sporting activities. The proposed legislation would restrict this.
Again, I encourage you to contact me with your thoughts and opinions of 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 at the Capitol is (402) 471-2733.
Just under five hundred bills and legislative resolutions were introduced during this legislative session. Bill introduction is limited to the first ten days of a legislative session. The Legislature is currently in the process of conducting public hearings on every piece of legislation that was introduced.
Chief Justice Michael Heavican presented his 11th State of the Judiciary to the Legislature this past week. He spoke of problem-solving courts, noting that Nebraska has two new Veterans Treatment Courts. Veterans courts are designed to give persons who have served in the armed forces, and may have substance abuse or mental health issues that contributed to their criminal behavior, a second chance, by utilizing intensive judicial and probation supervision and trained veteran mentors. The other problem-solving courts are primarily drug courts. The participants must overcome addictions and commit to rehabilitate themselves. Every problem-solving court participant is one less person incarcerated.
Chief Justice Heavican mentioned that they were beginning implementation of reentry courts, to provide additional supervision to individuals returning to society from incarceration or post-release supervision. He also noted that there has been an increase of approximately 1,400 individuals in the adult probation program over the last two years, indicating that both judges and probation officers are doing their part to implement the directives from the Legislature regarding Justice Reinvestment. He was pleased to announce that the recidivism rate for all adult probationers was approximately 15%, which is a very good number based on adult probation national standards. The Chief Justice emphasized that there is a large demand for increased probation services and specialty courts, particularly to address mental health issues, which saves money in the long run. However, he noted that with the budget shortfall facing the Legislature, it will be difficult to attain additional funding.
I introduced four bills this year. LB 745 deals with sales tax refunds in situations where sales taxes have been overpaid or should not have been paid. The legislation focuses on local option sales tax refunds of at least $5,000. It requires the Department of Revenue to notify the affected city or county within 20 days of receiving the claim and to give them the option of having such refund deducted from their tax proceeds in either a lump sum or in 12 monthly installments. This will allow cities and counties to better plan for such occurrence. I have worked with Nebraska City and the League of Nebraska Municipalities on this legislation.
Currently there is no formal process for naming sites or structures in the capitol, on the capitol grounds, or within the capitol environs. LB 746 authorizes the Nebraska Capitol Commission to take on this responsibility. The members of the Nebraska Capitol Commission include the Governor, the Speaker of the Legislature, the Chief Justice of the Supreme Court, the dean of the College of Architecture, the director of the State Historical Society, and three other members appointed from each congressional district.
I introduced LB 861 in an effort to help Johnson County taxpayers with expenses arising from incidents occurring at the Tecumseh State Correctional Institution. Under the legislation, if a county’s costs for prosecution stemming from a single incident at a correctional institution exceed 2 ½ cents per $100 dollars of taxable valuation of property subject to the levy, such costs in excess would be paid by the State of Nebraska.
Finally, LB 980 would allow for over width permits, not to exceed 12 feet, on the Interstate in order to haul hay bales. Surrounding states allow for such permits and in working with the Nebraska Department of Transportation, I have found that they are not opposed to this. A public hearing date has been set for January 30, before the Transportation and Telecommunications Committee.
The Executive Board, of which I serve as chair, introduced LB 744 and has scheduled a public hearing for January 22. The purpose of this legislation is to clarify existing procedure for election contests and qualification challenges to a seat of a member of the Legislature. The legislation codifies what is in rule regarding election contests and qualification challenges.
As public hearings get into full swing, I encourage you to inform me of your opinions on the legislation. 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.
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.
LB 461, the Governor’s plan for tax relief, failed to receive the necessary votes to end the filibuster and allow a vote on the advancement of the bill. A motion to invoke cloture requires 33 votes, but it only received 27, with 9 senators voting no and 13 senators choosing not to vote.
LB 461 proposed to change the way agricultural land is valued from the current market based approach to a new income-producing approach. The statewide aggregate agricultural property valuation could not have increase more than 3.5% from the previous year. The legislation proposed to lower the top brackets of the individual income tax and the corporate income tax to 5.99% in increments over multiple years, when the expected rate of growth in General Fund receipts grew at least 3.5% and 4.0% respectively. Although there were positive features in this legislation, the bottom line was that it provided approximately $10 in income tax relief for every $1 in property tax relief.
Since I hear overwhelmingly from my constituents that their property taxes are too high, I offered an amendment that would have provided for property tax relief first, before income tax relief would be triggered. My amendment proposed to add $75 million to the Property Tax Credit fund when the expected rate of growth is at least 3.5%. The amount of income tax relief each year was lowered and the triggers increased. This property tax relief would have been in addition to the annual $224 million currently appropriated to the Property Tax Credit Cash fund, offering dollar for dollar tax relief to property owners.
After offering my amendment, I began negotiating with Senator Jim Smith, the chair of the Revenue committee and sponsor of LB 461, and the governor’s office. We came up with a compromise amendment that would have offered a higher ratio of property tax relief than income tax relief.
Although the compromise wasn’t everything that I wanted, I voted in support of the cloture motion because it would have made property tax relief a priority. However, when the cloture motion failed, LB 461 was pulled from the agenda and will not reappear this session. I will continue to work on property tax relief, with the hope that we can still get something accomplished this year.
The Legislature gave the budget bills second round approval this past week. To address the latest decrease in projected revenue of $55 million, the Appropriations Committee recommended approximately $10 million in additional cuts and transfers, as well as lowering the minimum reserve requirement from 3% to 2.5% for this biennium only.
Since the legislative session began, the budget gap grew to about $1.1 billion, as the Economic Forecasting Advisory Board twice lowered revenue projections. The budget was balanced through cuts in spending or cuts in the growth of spending of approximately $700 million, transfers from cash funds of $230 million, and withdrawing $173 million from the cash reserve fund.
My priority bill, LB 44, was discussed during the second round of debate this past week. LB 44 required out-state internet retailers to either collect the sales tax or follow reporting requirements spelled out in the legislation. In 1992, the Supreme Court upheld its 1967 ruling that prohibited states from requiring remote sellers to collect sales tax on sales shipped into their state, as it would place an undue burden on out-of-state retailers. States responded by adopting a comprehensive interstate system to streamline their sales tax rules, called the Interstate Streamlined Sales and Use Tax Agreement. Legislation has been introduced on the federal level for years, to grant states that have complied with this agreement the authority to require remote sellers to collect sales and use tax, but has yet to pass.
In frustration over inaction on the federal level, at least 28 states have introduced over 50 bills in an attempt to recover this sales tax revenue which is owed, but few pay. LB 44 combined the South Dakota collecting law, which was introduced as a vehicle to challenge the outdated Supreme Court ruling, and the Colorado reporting law, which has been upheld in court.
An Attorney General’s opinion was sought on LB 44, which stated that it was likely unconstitutional unless amended. I offered an amendment that satisfied the concerns stated in the opinion and clarified the intent of the bill.
I introduced LB 44 as a matter of fairness for our main street businesses, as it would help level the playing field with online retailers. After several hours of discussion, I did not call for a cloture vote, as I realized that I did not have the necessary 33 votes. The governor had indicated that he would veto the bill, which hindered my chances of success. I will try to work with the governor over the interim and bring this bill back next year.
As we enter the final weeks of this legislative session, I still encourage you to contact me with your opinions on the legislation that is 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.
The Legislature debated a number of important issues this past week. LB 640 was up first. This bill proposed to cap the property tax portion of total general fund revenue supporting K-12 school districts at 60%. It also sought to lower the maximum levy for school districts from $1.05 to $1.00 per one hundred dollars of taxable valuation. Although LB 640 would have resulted in property tax relief, the revenue needed to fund the legislation would have been transferred from the Property Tax Credit Fund. This fund currently disperses $224 million in dollar for dollar property tax relief annually. Senators generally saw it as robbing one pot and putting it in another, making it doubtful that the bill will be on the agenda again.
LB 409 seeks to revise the state school aid formula (TEEOSA) by reducing the base limitation rate from 2.5% to 1.5%, which would reduce the amount of increase in TEEOSA aid provided to school districts for the next two school years. It changes the local effort rate from $1.00 to $1.02, which also reduces the amount of state aid provided to school districts because the formula assumes a district has increased resources. Furthermore, LB 409 reduces net option funding by 4.5%. This legislation was necessary due to the significant revenue shortfall that the state is facing. Since TEEOSA school aid represents 69% of total general fund aid to local governments, it was not feasible to leave it off the table when considering budget cuts. Even with LB 409, the amount appropriated to TEEOSA represented the largest increase in the Appropriations Committee’s recommendations for the next biennial budget.
The Legislature also discussed LB 622, which would legalize marijuana for certain medical conditions, and LB 661, which would provide for confidentiality of lethal injection drug sources. Both bills were given a couple hours of debate and now the bill’s sponsor must show the Speaker of the Legislature that he/she has the 33 votes to overcome a filibuster in order for the bill to be placed on the agenda again.
Senators also discussed numerous bills on consent calendar this past week. Consent calendar is limited to non-controversial bills that don’t contain a lot of changes and do not have a general fund impact. This procedure gives bills that don’t warrant a priority designation the chance of passage. An example of this is LB 463, the bill I introduced that would allow a village chairperson to appoint cemetery board members from the county, as well as the village. I introduced this legislation because some villages were having difficulty finding people to serve on the board.
The week ended with discussion on LB 461, the governor’s proposal for tax relief. LB 461 would change the way agricultural land is valued from the current market based approach to an income-producing approach. Capitalization rates would be derived using estimated net income divided by the market value of land as determined using comparable sales. Capitalization rates would be adjusted to assure that aggregate taxable values fall between 55% and 65% of market value. The percentage growth in aggregate taxable value statewide for agricultural land would be limited to 3.5%.
LB 461 also decreases the top individual and corporate income tax rate to 5.99% over a number of years when the expected rate of growth in general fund receipts is at least 3.5% and 4% respectively. The Earned Income Tax Credit would be increased from 10% to 12% of the federal credit. The personal exemption would be reduced for the higher income and a new credit would be created for the lower income. However, calculations reflect that when fully implemented, wealthier Nebraskans are the biggest beneficiaries of this tax relief plan, which offers approximately $10 in income tax relief for every $1 in property tax relief.
I am working on an amendment that alters the trigger mechanism for income tax reductions by increasing the percentage and requiring that it be based on actual rather than expected growth rates. It also would require any increased revenue above the trigger level to be distributed to the Property Tax Credit Fund, with a smaller portion directed towards lowering the top income tax rate. I spoke on the floor that I am opposed to LB 461 as it currently stands because my constituents overwhelmingly favor property tax relief over income tax relief. Although some senators questioned why we were even discussing tax decreases when facing an approximate $1 billion shortfall in revenue projections, many senators support the governor’s efforts. It will be an uphill battle to substantially change this legislation.
Next week will be devoted to budget deliberations. By legislative rule, the 2017-18/2018-19 biennial budget has to be passed by the 80th day, which falls on May 10 this year.
Again, I encourage you to notify me of your thoughts on legislation that senators are discussing. 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.
My priority bill, LB 44, received initial approval from the Legislature this past week. LB 44 seeks to collect sales tax on Nebraska purchases from out-state online retailers. This is not a new tax, as Nebraska law requires that if sales tax is not collected by the seller on any taxable sale, the purchaser must remit the use tax directly to the state. There is a line on the Nebraska Individual Income Tax Return for individuals to report their use tax due on Internet purchases. However, few Nebraskans comply.
Fifty years ago, the U.S. Supreme Court ruled that states could not require that sales tax be collected on mail-order sales shipped into a state because the diverse state and local sales tax systems among the states would make collecting sales taxes an undue burden on out-of-state retailers. This decision was upheld in 1992, 25 years ago, when the internet was in its infancy. Times have significantly changed since then. States have responded by adopting a comprehensive interstate system to streamline and harmonize their maze of sales tax rules and requirements. This tax loophole, which places main street businesses at a distinct disadvantage, is now costing states $17.2 billion in lost sales tax annually. The injustice prompted a United States Supreme Court Judge to note that these rulings have resulted in a startling revenue shortfall in many states, creating unfairness to local retailers. State’s education systems, healthcare services and infrastructure are weakened as a result. Justice Kennedy concluded that it was unwise to delay any longer a reconsideration of the court’s ruling.
Under LB 44, online retailers meeting a certain threshold for sales volume will either have to collect the sales tax or abide by the reporting requirements, including notifying purchasers that the sales tax is due and submitting information to the Nebraska Department of Revenue showing the total amount paid in the previous year by each purchaser. LB 44 combines the “collecting” law from South Dakota, which was introduced as a means to get the U.S. Supreme Court to reexamine their earlier ruling, and the “reporting” law from Colorado, which was affirmed by the U.S. Court of Appeals for the Tenth Circuit.
I believe that LB 44 avoids the constitutionality issue, as it does not require remote sellers to collect the sales tax, instead giving them a choice of following the reporting requirements. However, the Governor believes otherwise and is actively working against the bill, indicating that he will veto it if passed. I want to stand in support of all businesses in Nebraska. LB 44 needs to pass to create a fair environment for our small businesses.
LB 68 proposes to give the Nebraska Legislature the sole authority to regulate the ownership, possession, transportation, carrying, registration, transfer, and storage of firearms, ammunition, and firearms accessories. Local authorities would retain the authority to regulate the discharge of firearms and to provide for appropriate zoning designations. LB 68 would ensure consistent, statewide uniformity of laws for firearm owners. Currently, there is a patchwork of laws in our state, making it confusing for law-abiding gun owners as they travel across the state. Although LB 68 was filibustered by opponents, a motion for cloture to cut off debate and allow for a vote on the advancement of the bill was successful, receiving the necessary 33 votes. After the cloture vote, LB 68 received first-round approval from the Legislature on a 32-12 vote. I am a co-sponsor of LB 68.
LR 6 is a legislative resolution that applies to Congress, under the provisions of Article V of the U.S. Constitution, to call a convention of the states limited to proposing amendments to impose fiscal restraints on the federal government, limit the power and jurisdiction of the federal government, and limit the terms of office for its officials and for members of Congress. So far, 10 of the necessary 34 states have endorsed similar resolutions. Any amendments proposed by such a convention would need to be ratified by at least three-fourths of the states.
LR 6 was debated by the Legislature for 3 hours. Proponents feel that it is necessary to limit the power of the federal government. Opponents note that the convention would not be limited to the items listed. It appears that Senator Ebke, the sponsor of the bill, will have to prove that she has the necessary 33 votes for cloture before the resolution is placed on the agenda again. I have signed on as a co-sponsor of this resolution.
During the remaining 25 days 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 email@example.com and my telephone number is (402) 471-2733.
The Revenue Committee advanced a package of tax cuts to the full Legislature on a 6-2 vote after several months of work. However, LB 461 contains approximately $10 in income tax relief for every $1 in property tax relief. Earlier, I had stated that I could only support income tax relief if it provided $1 in income tax relief for every $10 in property tax relief.
The total annual cost for this package in ten years would be approximately $450 million. During the upcoming two years, when the state is facing a significant budget shortfall, any loss in revenue would be countered with the suspension of two tax credits – the New Markets Job Growth Investment Act and the Nebraska Historic Tax Credit.
Beginning next year, agricultural land would no longer be valued using market value based on comparable sales. Instead, valuation would be based on the income-capacity of the land. The legislation would ensure that the capitalization rate established resulted in an aggregate agricultural use value that is between 55% and 65% of its actual value. The state average agricultural use value would be capped at 3.5% over the previous year.
In 2019, the top corporate income tax rate would be reduced from 7.81% to 7.59%. The two lowest individual income tax rates of 2.46% and 3.51% would be combined at a rate of 3.25%. In an effort to help low-income workers, the Earned Income Tax Credit would be increased from 10% to 11% of the federal earned income tax credits, further increasing to 12% in 2020.
Beginning in 2020, LB 461 proposes to reduce the top individual income tax rate of 6.84% and the top corporate income tax rate of 7.59% to 5.99%. This would occur over a number of years if the projected growth in state revenue is at least 3.5% for the individual income tax rate reduction and 4.0% for the corporate income tax rate reduction.
Although not part of the package, the Revenue Committee advanced another bill that deals with property taxes. As amended, LB 640 proposes to cap property taxes at 55% of a school’s general fund revenue. However, the funding for this would come from the Property Tax Credit Fund, which now provides $224 million annually in property tax relief to taxpayers. Although I believe that there is a disproportionate burden on property taxes to fund our schools, particularly in rural areas, I also believe that the Property Tax Credit Fund is a good way to provide dollar for dollar relief to property taxpayers.
I am disappointed with the options that have been placed before the Legislature dealing with tax relief. I will work with other senators to determine if alternative measures can garner sufficient support.
The Governor signed LB 46 this past week, the bill I introduced authorizing “Choose Life” license plates. He emphasized that this is the first pro-life legislation passed in the last 6 years.
The Appropriations Committee is finishing its work on the next biennial budget. This has been a very difficult task due to the significant shortfall facing the state.
As we begin to discuss tax relief measures and budgetary issues, I encourage your input. 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 Legislature began full-day sessions this past week, debating and advancing numerous bills. Among them was LB 137, which would adopt the Unclaimed Life Insurance Benefits Act. The act requires life insurance companies to compare its insureds with the Death Master File of the U.S. Social Security Administration to identify possible matches and determine whether benefits are due. The insurance companies would be required to try to locate the beneficiary and provide them with instructions on how to make a claim.
People usually purchase a life insurance policy as a means to provide money to family members when they die. However, the family members aren’t always aware of the existence of the policy. Sometimes companies can’t locate the beneficiaries but this isn’t always the case. Insurance officials estimate at least $1 billion in life insurance benefits are unclaimed nationally. More than twenty states have enacted similar legislation to LB 137. I believe it is time that Nebraska joined the ranks, so I signed on as a co-sponsor of the bill. LB 137 received first-round approval on a 31-0 vote.
LB 487 was given initial approval by the Legislature on a 35-4 vote. It proposes to change penalties for persons experiencing or witnessing a drug overdose if they request emergency medical assistance for themselves or another person. For the exemption from charges for possession of a controlled substance to apply, the person must be the first to request assistance, must remain on the scene until help arrives and must cooperate with emergency personnel. LB 487 is similar to legislation passed a couple of years ago that protected minors who called for help for friends experiencing alcohol poisoning.
A bill that was amended into LB 487 through the Judiciary Committee amendments was LB 167. This bill proposes to reschedule cannabidiol in a drug product approved by the FDA into Schedule V of the Nebraska Controlled Substances Act. Currently, cannabidiol (known as CBD) in any form is a Schedule I Controlled Substance with a high potential for abuse and no approved medical use. CBD can be referred to as the “medical part” of the marijuana plant, which is different from THC, the “recreational part” of the plant that gets a person high.
Later this year, CBD in a pharmaceutical formulation will be submitted to the FDA for approval. The drug, called Epidiolex, is an investigational product being studied as a potential anti-convulsive treatment for children with certain types of epilepsy. LB 167 allows Nebraska to proactively reschedule CBD in an FDA approved product, ensuring it will be available to patients in Nebraska as soon as rescheduling by the DEA on the federal level is complete.
The Revenue Committee is continuing to work on a package for tax relief that will be sent to the full Legislature for debate. It appears that it may include an income tax relief provision, which would commit future revenue for this purpose. Therefore, senators who believe that property tax relief needs to be the priority may not be able to support the package. I am disappointed in the direction this legislation is going.
Again, I encourage you to contact me with your thoughts and opinions on legislation that is being discussed by senators. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, Nebraska 68509. My telephone number is (402) 471-2733 and my email address is email@example.com.
I have been appointed to chair a Special Committee of the Legislature to hear a challenge to Senator Ernie Chambers’ qualifications to represent his legislative district. The challenger unsuccessfully ran against Senator Chambers in the general election. He then filed a qualification challenge, as allowed by state law and legislative rules, questioning whether Senator Chambers has satisfied the Nebraska Constitution’s residency requirement.
The Special Committee is made up of seven legislators, including myself. The committee hired outside legal counsel, former Supreme Court Judge William Connolly. At our first meeting, the Special Committee discussed jurisdictional issues and determined that the challenger had met all statutory requirements for filing his challenge. A second meeting was held to approve an order regarding procedures for the hearing on the merits of the challenge and to set the hearing date. The hearing is scheduled for April 7th in the State Capitol.
I introduced LB 46 to authorize the Department of Motor Vehicles to design “Choose Life” license plates. The design is to reflect support for the protection of Nebraska’s children. Choose Life license plates, which allow motorists to show support for pregnant mothers and the unborn, are available in 29 states. The additional revenue brought in through the sale of the plates would be used to supplement federal funds available for the Temporary Assistance for Needy Families program. TANF provides cash assistance to low-income families with minor children and is used to pay for family living expenses, such as rent, utilities, food, clothing and other necessities. LB 46 was given second-round approval this week and is now ready for final reading.
The Appropriations Committee, on which I serve, has completed the public hearing process on all bills referred to the committee, and has heard from state agencies. We will now begin post-hearing budget reviews. Our final recommendations are due to the entire Legislature by the 70th legislative day, which falls on April 24 of this year.
Farm profits in Nebraska were expected to fall to just over $4 billion in 2016, down from a high of approximately $7.5 billion in 2013. The valuation of agricultural land is beginning to decrease but not to the extent that farm income has fallen. A local economist recently noted that local taxing authorities have continued to increase property taxes on farmland, even with sharply lower farm income. Between 2013 and 2014, assessed values of farmland for a 10-state rural region increased by 11.4%, while farm earnings fell by 18%. During this time, local governments increased K-12 school spending per student by a median 3.3%, with Nebraska showing a 7.3% increase, the highest among the 10 states.
This illustrates the critical need to decrease property taxes, yet some senators in the Legislature and the Governor are still focusing on income tax relief, as well as property tax relief. The only way I could support any income tax relief is if we offered $10 of property tax relief for every $1 of income tax relief. However, the feasibility of offering any tax relief will depend on budget negotiations, as the state is facing a $1 billion shortfall. The Appropriations Committee is in the process of cutting spending significantly, something that also must be done on the local level. These cuts are difficult to make but the alternative is an increase in taxes.
As the public hearing process nears completion and the Legislature discusses bills with priority status, I encourage you to inform me of your 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.
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