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The Legislature gave first-round approval to the budget package this past week. Senators also stopped a measure that proposed to repeal the motorcycle helmet law for riders 21 years of age and older.
Progress has been made this past week on property tax relief, although it isn’t as comprehensive as hoped. LB 958, introduced on behalf of the Governor, sought to slow the increase in agricultural land valuation by capping statewide agricultural land valuation growth at 3% per year. It also aimed to slow the growth of property taxes levied by political subdivisions. After significant opposition was encountered from representatives of cities and other political subdivisions, the committee eliminated most of the bill, except for the portion that limits the unused restricted fund authority for community colleges to 3% of their prior year’s restricted funds. In the amendment proposed by the Revenue Committee, instead of the 3% cap on valuation, the committee is proposing an increase in the Property Tax Credit program. This program provides direct property tax relief for property owners through a credit on their property tax statement. Last year, funding for this program was increased by $64 million to $204 million in annual funding. This year, the proposed increase in credits would be directed to agricultural land owners. Since this is a new concept, the Revenue Committee will hold a public hearing on the proposed amendment on Thursday, March 24. After calculations are completed, an amount of funding will be added to the amendment.
A companion bill, LB 959, also introduced on behalf of the Governor, intended to slow the growth of spending and property taxes levied by school districts. It was advanced from the Education Committee, after being substantially amended. The bill now proposes to eliminate the minimum levy adjustment, which takes away state funding from schools with levies below $0.95. Additionally, it would tighten limits on a special project fund that schools use to address safety, environmental hazards, accessibility barriers and mold in existing buildings.
Two other bills promising property tax relief encountered roadblocks this past week. LB 717, introduced by Senator Mike Groene, proposed to use a 5-year history of comparable sales, excluding 20% of sales with the lowest valuation to sale price ratio, in an effort to remove abnormal high priced sales. It also would have frozen 2016 valuations at the 2015 level. An attorney general’s opinion stated that the bill is likely unconstitutional as it would appear to result in property within the same class being assessed at values that are not uniform and proportionate relative to their market value.
LB 883, introduced by Senator Jim Scheer and eleven other senators, including myself, was killed by the Education Committee. This legislation proposed to add a per student foundation aid component to the K-12 school funding formula, in an effort to reduce property taxes by giving every school district some base funding through the state aid formula. Currently, almost two-thirds of our school districts don’t receive equalization aid because their resources from property taxes exceed their needs, which illustrates the high dependence on property taxes in our school funding formula. This concept would require additional revenue to implement and I feel that this is a discussion that needs to take place.
According to calculations made by Senator Scheer’s office, under LB 883, schools in District #1 would have seen substantial increases in state aid. Following is the projected amount of additional state aid that schools would receive over the current amount, with the addition of $3,000 per student in foundation aid. Sterling Public Schools – $587,467; Johnson County Central Public Schools – $1,515,000; Johnson-Brock Public Schools – $389,596; Auburn Public Schools – $198,681; Syracuse-Dunbar-Avoca Schools – $2,123,988; Nebraska City Public Schools – $580,394; Palmyra District OR 1 – $1,135,510; Pawnee City Public Schools – $306,458; Lewiston Consolidated Schools – $37,773; Falls City Public Schools – $2,455,119; and HTRS Public Schools – $1,029,000.
Property taxes bear a disproportionate burden in support of our school districts, especially in our rural areas. I believe the concept of foundation aid has merit and I am hopeful that it plays a major role in the Legislature’s continued discussion of property tax relief this year and in following years.
As we begin late night sessions, I encourage your input on legislation of interest to you. 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.
February 19th marked the deadline for priority bill designations. Every senator is allowed to designate one bill as their personal priority bill. Committees are allowed to designate two bills and the Speaker of the Legislature is allowed to designate up to 25 bills as speaker priority bills. Typically, after the deadline date, bills that have not been designated as priorities do not stand a good chance of being debated, unless they are non-controversial and are chosen for consent calendar.
I chose LB 744 as my priority bill. It recognizes communication and contact agreements to permit continuing communication and contact after the placement of an adoptee between the birth parents and the adoptive parents in private and agency adoptions. However, the law would make it clear that the existence of, or the failure to comply with such agreements, does not affect the adoption decree, the relinquishment of parental rights, or the written consent to adoption.
Senator Lydia Brasch chose LB 960, introduced by Senator Jim Smith, at the request of the Governor, as her priority bill. LB 960, the Transportation Innovation Act, would create three new programs funded by transfers of up to $150 million from the Cash Reserve Fund to the Transportation Infrastructure Bank Fund by June 30, 2023 and pledges up to $150 million of state motor fuel taxes collected during the same time period. A major purpose of the Accelerated State Highway Capital Improvement Program is to fast-track the completion of the expressway system. The County Bridge Match Program is proposed to promote innovative solutions and additional funding to accelerate the repair and replacement of county bridges. The goal behind the Economic Opportunity Program is to finance transportation improvements to attract and support new businesses and business expansions.
Senator Ernie Chambers picked LB 1056, the Patient Choice at End of Life Act. This legislation would allow an adult with a terminal illness to request a prescription for aid-in-dying medication. Senator Tommy Garrett has chosen LB 643, which would allow for the use of marijuana for medical treatment. Senator Mike Gloor selected LB 1013, which proposes to increase the tax on cigarettes from $0.64 to $2.14 per package.
Senator Laura Ebke has designated LR 35, which calls for Nebraska to join other states in passing an application calling for an interstate convention for the purpose of proposing amendments to the U.S. Constitution. The scope of the convention is 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. The convention will only occur after 34 states pass the same application. In order for a valid amendment to emerge from the convention, it needs a simple majority vote. However, it still must be ratified by the legislatures of 38 states before becoming part of the U.S. Constitution.
Senator Mike Groene selected LB 717, which would change the way that land is assessed for property tax purposes, using a 5-year history of comparable sales, rather than the current 3-year history for agricultural and commercial property and two years for residential property. It would exclude the sales that constitute the lowest 20% of assessment ratios, thereby removing abnormal sales and smoothing out the spikes in valuation. It would also freeze 2016 valuations at the 2015 level of assessment.
Senator Jim Scheer picked LB 883 as his priority. This bill, which I have mentioned several times in past newsletters, proposes to add a student foundation aid component to the school finance formula. It would provide a base level of funding to all public school districts, regardless of whether they qualify for equalization aid.
Senator John Kuehn prioritized LR 378, a constitutional amendment introduced in an effort to protect agriculture as a vital sector of Nebraska’s economy by guaranteeing the rights of Nebraskans to engage in farming and ranching practices. It is meant to protect Nebraska farms from out-of-state extremist animal rights and environmental groups that target Nebraska agriculture.
The Revenue Committee chose LB 958 and the Education Committee selected LB 959 as committee priority bills. These two bills, introduced at the request of the Governor, aim to slow the increase in statewide agricultural land valuation, slow the growth of property taxes levied by the political subdivisions, and slow the growth of spending by schools.
The Health and Human Services Committee selected LB 1032 as one of their committee priority bills. LB 1032, which would adopt the Transitional Health Insurance Program Act, is the fourth attempt at Medicaid Expansion under the federal Affordable Care Act. Even with the federal government picking up 90% of the cost, the Department of Health and Human Services has estimated that over a 10-year period, it could cost our state almost $1 billion to pay for health insurance for this expanded population.
These are just a few of the bills that have been designated as priorities, but portray the controversial issues that have been selected. Senators are set to begin all day debate the first full week in March. I can foresee that we will be working into the evening on many nights prior to our scheduled last day on April 20.
I have heard from constituents who have received telephone calls from organizations asking them to call their senator either in support or against a certain issue. Sometimes these robo calls may give you incorrect information. You may need to ask some questions or do some research in order to get the full story.
As we get into discussion of priority bills, I encourage you to inform me of your opinions. Only with your input, can I thoroughly represent my district. 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.
The chairman of the Revenue Committee, Senator Mike Gloor, introduced LB 958 at the request of the governor. LB 958 is part of a property tax relief proposal offered by Governor Pete Ricketts. The public hearing on LB 958 was held this past week before the Revenue Committee, lasting 6 ½ hours. The governor was the first proponent testifying after Senator Gloor.
The intent of the Governor’s proposal is to slow the increase in state-wide agricultural land valuation and to slow the growth of spending and therefore, property taxes levied by political subdivisions. The legislation limits the budgeted growth of restricted funds, eliminates exclusions to the levy limit, and limits the state-wide increase in agricultural land valuation to 3%.
Under LB 958, if the increase in agricultural land in any year exceeds 3% on a statewide aggregated basis, the Property Tax Administrator will determine the factor needed to uniformly and proportionately reduce the value of every parcel of agricultural land so that the statewide aggregate increase on agricultural land does not exceed 3%. The adjusted valuation used for the calculation of the school finance formula would also be adjusted by this factor.
Governor Ricketts said that the legislation introduced this year is a step toward his broader goal of tax relief in Nebraska. He pledged to continue to work to reduce property and income taxes during his time as governor. He mentioned that he has heard from Nebraskans that say his proposal doesn’t go far enough and from others, primarily local governments, that felt it goes too far, leading him to conclude that it strikes the right balance.
Earlier this week, the Nebraska Farm Bureau, the Nebraska Cattlemen and the Nebraska Pork Producers all indicated their support for LB 958. The three major agricultural groups believe that the governor’s proposal is a step in the right direction and will help remedy the disproportionate property tax burden placed on agricultural landowners when supporting school districts.
Open Sky Policy Institute testified in opposition to LB 958. The Institute released a policy brief stating that if an assessment growth cap on agricultural land had been in effect for this year, it would have resulted in shortfalls for schools and other localities, tax shifts and disparate impacts on agricultural landowners. They cited another study which stated that such unintended consequences are why assessment caps are among the least effective, least equitable, and least efficient strategies available for property tax relief. While the intent of the cap is to help the agricultural community, the Institute believes that the largest benefits will go to farmers and ranchers near urban areas, not to the most rural parts of Nebraska.
Others testifying in opposition to LB 958 stated that the bill would shift taxes to residential and commercial property owners. Others feared the potential loss in revenue for school districts and other political subdivisions. City representatives stated that it would hinder their ability to save money for major projects, as well as provide for services such as public health and 911 coverage, because the bill would put capital improvements and expenditures for interlocal agreements under the overall budget limit.
As the Legislature continues to discuss various bills pertaining to tax relief, I encourage your comment. 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 Platte Institute, initiated in 2008, was Nebraska’s first free market think tank. It is a non-partisan, non-profit research and educational institute. It was founded on the belief that protection of the freedoms and quality of life that Nebraskans enjoy is best served by encouraging free enterprise initiatives and promoting individual responsibility and dialogue. The institute’s staff and scholars study public policy issues and develop proposals to increase economic opportunity, while protecting the individual rights of Nebraskans.
The OpenSky Policy Institute is also deemed a non-partisan think tank, focusing on tax and budget issues. OpenSky began its work in 2011, after three years of organizational planning. OpenSky’s mission is to improve opportunities for every Nebraskan by providing impartial and precise research, analysis, education and leadership.
Both the Platte Institute and the OpenSky Policy Institute have worked on proposals for tax relief. Senator Jim Smith of Papillion introduced LB 357, on behalf of the Platte Institute. Senator Al Davis of Hyannis introduced LB 280 for OpenSky.
LB 357 proposes to invest $40 million a year over the next two years from the Cash Reserve Fund to provide immediate income tax relief to families and businesses. The proposal would gradually reform Nebraska’s income tax system with a goal of reducing the top rate to 5%, down from the current rate of 6.84%, and replacing the bottom rate of 2.46% with a 0% tax bracket. It also lowers the top corporate income tax rate from 7.81% to 5%. The proposal would freeze property tax rates while relieving local governments of unfunded state mandates. It is envisioned that income tax relief would be achieved entirely with state spending restraint, primarily by reducing the rate of growth in state spending. Since the cash reserve will be used for the first two years of the proposal, spending reductions are delayed until 2017.
The Platte Institute developed their long-term tax plan to provide more opportunities for Nebraska families and to create a business environment that is more competitive with other states. They believe that more savings for families and businesses will ultimately result in accelerated business creation, greater job growth and a vibrant, expanding state economy.
LB 280 aims to better balance the three major sources of taxes in our state – property, sales and income taxes. OpenSky recognized that the agriculture community is picking up a larger portion of funding for schools, without a corresponding growth in population or income, as agricultural income hasn’t risen as fast as land values. Their proposal would allow for the reduction of property taxes statewide, placing an emphasis on agricultural land owners.
As proposed in LB 280, agricultural land valuation would be reduced for purposes of calculating the school state aid formula from 75% to 65% of actual value. Furthermore, the bill would reduce the property tax levy cap on local school districts from $1.05 to 80.5 cents. To compensate for the lower property tax revenue, the proposal would impose a local income tax of at least 19.4% of a person’s state income tax liability. This revenue would be included as part of the resources calculation in the state aid formula, thereby assessing a community’s ability to pay. Finally, the bill establishes a foundation aid component for the state aid formula, which is a per-pupil amount that would go to every district, to guarantee a minimum level of support.
The public hearing on LB 280 and LB 357 has been scheduled for February 18 before the Revenue Committee. These are just two of the many bills that have been introduced by senators regarding tax relief. During the next several weeks, the Revenue Committee, the Education Committee, and the Appropriations Committee will be working on which proposals to advance to the floor of the Legislature. If you would like to voice your opinion on either of these two proposals or other legislation, I encourage you to contact me. 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.
Bills can be introduced during the first 10 days of the legislative session. The last day for bill introductions is Wednesday, January 21. The following is a brief description of the bills that I have been working on throughout the interim and have introduced so far.
LB 46, introduced on behalf of the statewide Trauma Advisory Board, revises language regarding the accreditation of rehabilitation centers in the state, specifically as it relates to the rehabilitation of trauma patients. The bill redefines the levels of rehabilitation services to reflect current practice and to bring the levels and definitions up-to-date.
LB 47 makes the question mandatory on an application for a driver’s license or identification card regarding whether to be on the Donor Registry. Currently, it is optional for applicants to answer this question. Nearby states that require responses have higher percentages of applicants indicating their wish to become donors.
Under LB 105, the state rather than the county, would have to pay for the costs associated with an autopsy and grand jury when an inmate dies in state custody. This is one of several unfunded mandates that the Legislature will address as we work towards property tax relief. This legislation would help Johnson County, where Tecumseh State Correctional Institution is located.
LB 106, the Livestock Operation Siting & Expansion Act, was introduced to encourage livestock development and expansion, which is extremely important to the economy of our state. The industry in Nebraska hasn’t grown in the past two decades at rates comparable to neighboring states. The legislation would allow counties to use a scoring matrix system for the approval of new or expanding livestock facilities, which would make the process more predictable and consistent throughout the state.
LB 130 would allow projects allocated funding through the Nebraska Resources Development Fund to be eligible for funding from the new Water Sustainability Fund. I will also introduce a bill to appropriate enough funding within the next two years to allow for the completion of these projects. These projects were existing when the new funding system was passed last year. They are important projects that are beneficial for the state and have already been approved through an extensive application process.
LB 145 would eliminate the executive officer licensing requirement, while retaining the ability of the Department of Banking and Finance to suspend the authority of the executive officer or impose fines upon the executive officer for violations of law. Nebraska may be the only state that requires a formal license process.
LB 178 would reduce the valuation of agricultural land by 5% per year for four years, thereby reducing it from 75% to 55% for school district taxation purposes. This is another option that is being presented to look at property tax relief and the high burden placed on agricultural land owners in the support of local schools.
LB 188, which I am introducing again this year, amends our current pursuit law, which was enacted to protect an innocent bystander who gets hurt as a result of a police pursuit. Nebraska is the only state that imposes liability on the law enforcement agency regardless of whether the law enforcement agency was negligent in its pursuit and even when the driver being pursued causes the injury to the “innocent third party”. Under this legislation, a passenger in a fleeing vehicle would not be considered an “innocent third party” if they entered the vehicle knowing that the driver was under the influence, if they are sought to be apprehended by law enforcement or if they are engaged in any illegal activity which would itself result in arrest.
LB 228 would reduce the corporate income tax rate to the level of the top two brackets of the individual income tax. Other types of companies, such as limited liability companies and Subchapter S corporations are considered “pass-through” organizations under state and federal income tax laws. This is a special business structure that is used to reduce the effects of double taxation, meaning that pass-through entities don’t pay income taxes at the corporate level, only at the individual owners’ level. LB 228 is attempting to level the playing field for the different types of business structures.
LB 229 appropriates funding for the CASA (Court Appointed Special Advocates) program. There are currently 22 CASA programs serving 38 Nebraska counties, with more than 600 volunteers advocating for more than 1,500 Nebraska children. Statistics have shown that a child with a CASA volunteer is more likely to be adopted and less likely to re-enter foster care. The funding would allow the program to continue and grow to serve more counties.
LB 364 would increase the funding appropriated to the Property Tax Credit program, funding the program at $200 million per year. This would translate into an approximate $100 credit for each $100,000 of valuation.
LB 386 would exempt header trailers and seed tenders from sales tax. Agricultural machinery and equipment was permanently exempted from state sales tax beginning in 1992. In 2012, the Department of Revenue issued a revised “Information Guide” ruling that these implements did not qualify for the sales tax exemption. This legislation would clarify that such trailers are exempt, as was the practice before the ruling.
As the bills are introduced, 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, Nebraska 68509. My email address is email@example.com and my telephone number is (402) 471-2733.