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The bill that contains the Governor’s proposal for tax relief was heard before the Revenue Committee this past week. LB 947, introduced by Papillion Senator Jim Smith, at the request of the Governor, drew a room full of interested persons offering testimony for four hours. In his opening, Senator Smith acknowledged that the legislation was short of perfection and stressed that it was a work in progress.
As introduced, LB 947 would offer property taxpayers a refundable income tax credit equal to 10% of property taxes paid. For taxable year 2019 and thereafter, if actual net General Fund receipts are at least 1% above certified estimated receipts, the percentage of property tax relief would increase by 2%, not to exceed 30% of property taxes paid. Residential homeowners’ income tax credit would be capped at $230 the first year, increasing by up to $50 each time the percentage is increased, up to a maximum of $730. For agricultural land owners, there is no cap on the refundable income tax credit.
LB 947 would also reduce the top rate of the individual and corporate income tax from 6.84% and 7.81%, respectively, to 6.69% over a two-year period. Furthermore, workforce development would be bolstered by a $10 million appropriation.
To pay for the tax relief proposed under LB 947, the legislation would eliminate the Property Tax Credit Program currently offered to property taxpayers, reflected on their tax statement, and the Personal Property Tax Relief Act, recently passed by the Legislature.
Governor Ricketts was the first proponent to testify on LB 947. He offered an amendment to strengthen the property tax relief provisions in the bill. His amendment would eliminate the trigger mechanism for increased property tax relief, instead placing the increases in statute. Under the amendment, the property tax relief would begin at 12% of property taxes paid, increasing by 2% every two out of three years, until reaching 30%. The Governor suggested using the cash reserve fund to pay for the additional property tax relief in the upcoming budget cycle. The question of how to pay for future years of escalating property tax relief is not addressed.
As amended, the Nebraska Farm Bureau and some other farm organizations, offered their support – contingent on the property tax relief increasing to 30% of property taxes paid. This is the approximate level of property tax relief proposed in LB 829, offered by Senator Steve Erdman, and in the initiative petition drive getting underway.
Public hearings were held on two of the bills that I introduced. On Tuesday, the Transportation and Telecommunications Committee heard LB 980, which would allow for overwidth permits (not to exceed 12 feet) to transport hay bales on the Interstate. The Nebraska Department of Transportation offered a letter in support of the bill and a representative of the Nebraska Farm Bureau testified in support. The Federal Highway Administration is not opposed to this legislation. Surrounding states allow for such permits and I believe Nebraska should follow suit.
On Thursday, the Revenue Committee heard testimony on LB 745, which 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. The bill would require the Department of Revenue to give advance notice to the municipality and would allow for repayment in 12 monthly installments. The City Administrator for Nebraska City testified in support, as did the Executive Director for the League of Nebraska Municipalities. Nebraska City recently got hit with a large refund and this bill would give cities more opportunity to plan for the necessary budget adjustments. Committee members noted that this has been an issue statewide for a number of years.
We are one-third through this legislative session. I urge 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.
Top issues by committee: (introducer, hearing date, status) (402)471-2733
LB 354 (Larson, 2/5, in committee) – Corn Check off
Privatizes board, retains state oversight, retains current 5/10 cent check-off. Farm Bureau total support if amended to prohibit lobbying on federal legislation.
LB 423 (Ag Comm., 2/12, in committee) – abuse and neglect of animals
Provides for improved protocols and availability of professional assistance to law enforcement in responding to incidents of livestock cruelty/neglect.
LB 60 (Larson, 1/22, in committee), LB 654 (Davis, 2/19, Larson has IPP motion) – Brand law
LB 60 removes Knox County from the brand inspection area and LB 654 expands it statewide.
Projected $194,984,422 short of minimum reserve at end of upcoming biennium FY 2013-15.
Governor’s proposal includes additional $62.1 million to University, $6.2 million to State Colleges and $10.7 million to community colleges, in return for tuition rate freeze; increases Medicaid funding by $214 million over the 2-year period for increased utilization and implementation of federal health care reform, provider rate increases, and due to reductions in the federal match rate (FMAP).
Banking, Commerce & Insurance
LB 384 (Nordquist, 2/19, in committee), LB 568 (Harr, 2/19, in committee) – Health Insurance Exchanges (federal health care reform)
LB 384, the Nebraska Exchange Transparency Act, establishes a stakeholder commission to provide oversight, recommendations and transparency regarding the implementation and operation of the insurance exchange. LB 568 requires the licensure of insurance navigators by the Dept. of Insurance.
LB 80 (Schumacher, 2/11, in committee) – liability limits
Doubles the minimum coverage limits for liability policies regarding proof of financial responsibility now set at $25,000 per person, $50,000 per occurrence and $25,000 for property damage. Hasn’t been increased in 25 years.
Business & Labor
LB 21 (Lathrop, 1/28, on Final Reading) – worker’s compensation
Repeals sunset for workers’ compensation benefits for mental injuries without corresponding physical injury for first responders.
LB 407 (Sullivan, 2/11, in committee), LB 640 (Hadley, 2/11, in committee) – TEEOSA
LB 407 contains permanent changes (eliminate teacher education allowance, instructional time allowance, averaging adjustment and local choice adjustment, etc) and phases in the scheduled return to permanent provisions that were modified due to the recession. LB 640 contains a temporary aid adjustment factor and reinstates the averaging adjustment in a different form.
Formula increase – 10%; Governor proposal – 5%; LB 407 – 7%; LB 640 – can’t be determined.
LB 179 (Kintner, 2/26) – Learning Communities
Abolishes the Learning Community of Douglas and Sarpy Counties.
LB 190 (Harms, before Appropriations Committee on 3/4), LB 495 (Sullivan, not set) – Early Childhood
LB 190 Increases state spending on early childhood education programs by $10 million per year (endowment – birth to age 3 – Sixpence) and LB 495 returns to General Fund four activities that were shifted to lottery funding during recession and half of the early childhood grant program (age 3-5). With freed up lottery proceeds, funding is available for the early childhood grant and endowment programs.
LB 590 (Lautenbaugh, 2/11, General File), LR 41 CA (Lautenbaugh, 2/11, General File) – Horseracing
Authorizes the State Racing Commission to license and regulate pari-mutuel wagering on historic horseraces. When similar bill vetoed last year, governor mentioned constitutionally suspect, hence introduction of constitutional amendment.
LR 34 CA (Schumacher, 2/25) – Expanded gambling
Allows the Legislature, rather than a vote of the people, to authorize and regulate forms of gambling (including casinos).
Government, Military & Veterans Affairs
LB 125 (Lautenbaugh, 1/24, passed) – OPS School Board
Decreased Omaha Public School Board from 12 to 9 members and requires new elections for all 9 members in May. Resolves late swearing-in issue. Elections would return to same schedule in primary and general election after this year.
LB 363 (Avery, 2/6, General File) – Public records
Attempt to keep the cost down for public records, LB 363 provides that public agencies could only charge for the cost of paper, equipment and toner related to copying documents. They could not charge for the labor of copier until after 6 hours.
LB 79 (Avery, 1/25, in committee) – CFLA
Repeals the Campaign Finance Limitation Act which was declared unconstitutional by the Nebraska Supreme Court. Lowers the dollar thresholds that trigger disclosure from $250 to $100 and requires all filings with the Nebraska Accountability and Disclosure Commission to be electronic as of January 1, 2016.
Health and Human Services
LB 577 (Campbell, 2/28) – Medicaid expansion (federal health care reform)
Extends Medicaid coverage to adults with incomes at or below 138% of the federal poverty level. Is now optional for states due to U.S. Supreme Court ruling. Federal Government would pay 100% from 2014-2016, decreasing to 90% by 2020.
LB 530 (Dubas, 2/13, in committee) – foster care payments
Requires the reimbursement rate recommendations of the Foster Care Rate Commission to be implemented by July 1.
LB 216 (McGill, 1/31, in committee) – former state wards
Creates a program for young adults in foster care when they reach the age of 19 to provide for extended support services, such as medical care, housing support and case management services, until they reach 21 years of age.
LB 44 (Ashford, 2/8, General File) – mandatory life sentences for juveniles
Introduced in response to a U.S. Supreme Court ruling that mandatory life without parole for those younger than 18 constituted cruel and unusual punishment, if only sentencing option. The bill does not specify a minimum number of years of imprisonment, but committee amendments offer a 30-year minimum (considered for parole after 15 years).
LB 561 (Ashford, not set) – Juvenile Justice system
Creates an Office of Juvenile Assistance to be overseen by the judicial branch. Expands the Nebr. Juvenile Service Delivery Project (pilot in Omaha, North Platte and Scottsbluff). Appropriates $10 million to create community-based services for juveniles currently made wards of the state. Proposes to close the juvenile detention centers in Kearney and Geneva.
LB 517 (Carlson, 2/13, in committee) – Comprehensive state-wide plan for water issues
Establishes a Water Sustainability Project Task Force charged with identifying water resources programs, projects and activities in need of funding in order to meet the long-term statewide goals of water sustainability, increased water use productivity and maximizing the beneficial use of water resources. Experts would be hired to accomplish objectives, using data from past studies. Funding from oil and gas severance taxes (currently transferred to the permanent school fund). A report is due to the Legislature by January 31, 2014.
LB 516 (Carlson, before Revenue Committee on 3/15) – Comprehensive state-wide plan for water issues
Establishes the Nebraska Water Legacy Commission. Proposes to earmark ¼ of 1% of sales tax revenue as a dedicated source of funding for new water projects, management and research, as identified by the recommendations developed as a result of the LB 517 study. Bill will be held over until next year.
LB 553 (Nordquist, 2/6, in committee), LB 554 (Nordquist, 2/6, in committee), LB 305 (Nordquist, 2/12, in committee) – Creates new tier and changes amortization for School Employees plan, Class V (Omaha) School plan and State Patrol plan
LB 229 (Nordquist, 2/12, in committee) – Strikes sunset on the additional $1 in court fees earmarked for judges plan
LB 306 (Nordquist, 2/12, in committee) – Changes amortization for judges plan and strikes sunset on increased judges’ contribution rate
Introduced to address defined benefit plan short-term and long-term funding obligations. To address long-term funding obligations – new tier of reduced benefits created for patrol and school employees hired after July 1, 2013. New tier would lower COLA from 2.5% to 1% and increase number of years from 3 to 5 for calculating final average salary. To address short-term funding obligations, amortization method would change from level dollar to level percent of pay. This change in amortization method would lower additional contribution amounts in short-term. As contribution amounts increase, would be offset by the lower cost of benefits for new tier members.
LB 405 (McCoy, Ashford, at request of Governor, 2/6, IPP – Eliminate the income tax
Eliminate the individual and corporate income tax and repeal $2.34 billion in sales tax exemptions, including medical equipment and medicine; hospital and college rooms; agricultural machinery, fertilizer and chemicals, energy used in agriculture, and seeds for commercial use; business repair parts and services; manufacturing machinery and energy used in industry; and from exempt organizations. The sales tax exemption on food would remain.
LB 406 (McCoy, Ashford, at request of Governor, 2/7, IPP) – Eliminate corporate income tax
Eliminate approximately $395 million in sales tax exemptions, allowing for the elimination of the corporate income tax and the exemption of the first $12,000 of retirement income for married couples and $6,000 for single individuals.
**Due to overwhelming opposition to both bills, the governor asked that they be killed, but that a comprehensive study be conducted on income, sales and property taxes over the interim.
LB 5, LB 17, LB 74, LB 75, LB 176, LB 227, LB 238 (Krist, Nordquist, Janssen, Smith, Kintner, Crawford, 1/30 & 1/31, in committee) – Exempt some or all retirement income from taxation (social security benefits, military retirement benefits)
To exempt all retirement income from taxation would reduce state revenue by more than $200 million annually.
LB 104 (Lathrop, 2/14, in committee), LB 501 (Hadley, 2/14, in committee), LB 572 (Harr, 2/14, in committee), LB 627 (Conrad, 2/14, in committee) – Nebraska Advantage Act
LB 104 adds a Tier 7 which would apply to investments in renewable energy. LB 501 encourages the development of renewable energy by adding a definition of qualifying renewable energy projects. LB 572 attempts to make it easier for a project to meet eligibility requirements for credits and changes the special capital gains exclusion to include Limited Liability Corporations which greatly expands the potential for use. LB 627 terminates the Nebraska Advantage Act and the Nebraska Advantage Rural development Act every 5 years unless extended by the Legislature.
Transportation & Telecommunications
LB 351 (Harms, 2/5, in committee) – drivers licenses for older citizens
Requires applicants for a drivers license that are 80 years and older to pass a cognitive test. If such applicant fails the cognitive test, required to pass the written test to be issued a license.
LB 189 (Harms, 2/11, in committee), LB 10 (Krist, 2/11, in committee) – seat belts
Would make a seat belt violation a primary offense and requires all passengers to use seat belts. LB 189 increases fine from $25 to $100 and assesses 1 point on driving record.
LB 118 (Harms, 2/11, in committee) – texting
Would make texting a primary offense.
LB 404 (McGill, 2/12, in committee) – Natural Gas
Amends the State Natural Gas Act by removing the statutory language which currently prevents the utility company from increasing the monthly charge more than 50 cents per month over the base rates for residential customers for infrastructure system replacement cost recovery charges.
LB 529 (Dubas, 2/12, in committee), LR 29 CA (Adams, 2/12, General File) – Tax Increment Funding
LB 529 amends the Community Development Law regarding approval of a redevelopment plan and use of TIF. Limits the redevelopment project valuation to 1.5% and the excess valuation to 5% of a city’s total taxable valuation. LR 29 is a constitutional amendment to replace the requirement that property be designated “substandard and blighted” with language stating that the property must be “in need of rehabilitation or redevelopment”. Committee amendments strike extension of maximum length of time to repay TIF bonds from 15 to 20 years.
LB 266 (Chambers, Revenue, 2/27) – repeal additional ½ cent local option sales tax authority
LB 381 (Janssen, Govt., not set) – Voter ID
LB 382 (Janssen, Govt., not set) – Winner takes all, electoral college
LB 518 (Janssen, HHS, 3/21) – Repeal prenatal care for illegal immigrants
LB 531 (Conrad, Revenue, 2/27) – Repeal Build Nebraska Act (¼ of 1% of sales tax dedicated to roads projects)
LB 613 (Schumacher, Executive Board, 2/19) – Create the Tax Modernization Commission – Senator Hadley offered an amendment at the hearing to allow the Revenue Committee to lead the comprehensive study of the tax code.
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