Two bills introduced at the request of the Governor were heard before the Revenue Committee in a lengthy hearing this past week. LB 337 was introduced by Senator Jim Smith, who serves as the Revenue Committee chair. It would phase in an income tax reduction for those in the top income bracket. The top bracket would be lowered from 6.84 percent to 5.99 percent over an eight-year period, or by approximately 0.11 percent a year. However, the decrease would only be triggered if the expected rate of growth in net General Fund receipts, as determined by the Nebraska Economic Forecasting Advisory Board’s October forecast, is 3.5 percent or greater. When fully implemented, LB 337 would reduce state revenue by $288 million.
Testifiers representing the business community offered support for the legislation, claiming that LB 337 will help grow the state. Opponents wanted the Legislature to focus on property tax relief and others expressed concern that LB 337 could have a negative impact on funding for local schools and other governmental services.
In October 2015, the Forecasting Advisory Board projected a 3.6 percent growth in revenue, which would have triggered a tax cut in 2016, if LB 337 would have been in effect. However, projections quickly dropped, as the state is now facing a projected $900 million shortfall.
LB 338 was introduced by Senator Lydia Brasch, the Agriculture Committee chair, at the request of the Governor. It creates the Agricultural Valuation Fairness Act. Rather than valuating agricultural land according to sales, which can be influenced by other uses for the land, the bill proposes to assess agricultural land based on its capacity to produce income. LB 338 also places a 3.5 percent cap on increases in valuation of such land from year to year. Under the bill, county assessors are to use a range of incomes for land capability groups and capitalization rates, as determined by the Property Tax Administrator, in calculating the agricultural use value. The income ranges are to be based on the average yield information for the ten prior years published by the U.S. Department of Agriculture.
Although most testifiers were in support of LB 338 and felt that it was a step in the right direction, concern was expressed that it didn’t go far enough in efforts to provide property tax relief. According to an analysis by Nebraska Farm Bureau, if LB 338 would have been in place in 2017, taxable values for agricultural land would have been $2.2 billion lower statewide. This equates to an approximate 2 percent reduction in agricultural land values or about a $20 million reduction out of $3.8 billion in property taxes levied statewide. Agricultural land values statewide increased more than 6 percent from 2015 to 2016 and more than 263 percent over the last decade.
LB 661, introduced by Heartwell Senator John Kuehn, was heard by the Government, Military and Veterans Affairs Committee. This legislation seeks to amend public records laws by providing confidentiality of information relating to the drugs used in carrying out the death penalty. Following the November vote to reinstate the death penalty, the Department of Corrections recently revised the lethal injection protocol in an effort to add flexibility so that the death penalty can be carried out. Originally, the revised protocol authorized the supplier of lethal injection drugs to remain confidential, but this portion was removed after the public hearing where testifiers criticized the secrecy and lack of transparency in the process. This bill seeks to reinstate the confidentiality provision. When introducing the bill, Senator Kuehn mentioned that some of the same drugs used in lethal injections are used in operating rooms, causing him concern about their availability if this bill is not passed. Fifteen of the thirty-one states that have the death penalty withhold information on the identities of those supplying the lethal injection drugs.
This past week before the Revenue Committee, I introduced LB 546 at the request of the Nebraska Department of Revenue and the Nebraska Department of Economic Development. The intent of the bill is to simplify the application and administrative aspects of the Nebraska Advantage Act by amending several areas of the current law that has caused delays in approval of applications and benefits earned under this tax incentive program.
Rob Clements, a banker from Elmwood, was selected by Governor Ricketts this past week to fill the vacancy of Senator Bill Kintner. His district covers all of Cass County, a portion of Sarpy County, and the northeast corner of Otoe County. I look forward to working with him on state issues, as well as issues concerning Otoe County.
As legislative committees continue with public hearings on bills, I encourage you to contact me with your comments 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.