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 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.