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The Legislature gave final approval to the budget bills this past week. Over the Memorial Day weekend, the Governor will decide whether to sign the bills or use his line-item veto authority.
The Legislature gave second-round approval to LB 507, which establishes the Step Up to Quality Child Care Act. Three-fourths of the children under the age of six have parents in the workforce. Approximately 43,000 children are in families that qualify for child care subsidies. The state spends $94 million on child care subsidies but currently there is little oversight to assure that the children receive high quality care. Quality child care has a direct correspondence on school readiness and later academic achievement.
LB 507 seeks to bring accountability for the public funds invested in child care and early childhood education, by the development of a 5-step quality rating and improvement system. The goal of the legislation is to encourage programs to improve and to help parents compare their options. The system would be available to all child care and early education programs voluntarily, but participation is required for programs that receive significant amounts of public funds. The ratings would be published online starting in 2017. Participating programs that meet quality standards would get bonuses and increased subsidy rates. Scholarships would be provided for child care staff to improve their education.
During the first-round of debate on LB 507, an amendment was adopted that increased the income eligibility requirements for families qualifying for the Child Care Subsidy Program from 120% to 130% of federal poverty guidelines. The increase in eligibility would cost the state approximately $1.7 million annually. I had some concerns regarding the fiscal impact of the proposal and offered an amendment to lower the increase in the eligibility requirements to 125% of the federal poverty level. However, my amendment was not successful.
LB 308, the bill that I designated as my priority bill, received first- and second-round approval this past week. The intent of LB 308 is to simplify Nebraska’s tax code, harmonizing state provisions with federal requirements, and to improve Nebraska’s economic competitiveness.
LB 308 seeks to repeal Nebraska’s alternative minimum tax (AMT), which is found in only 9 states. As created in 1969, it was intended to address the relatively limited number of high income individuals who paid no federal income tax because of investments in tax shelter partnerships. Federal legislation in 1986 effectively ended tax shelter investing. Today, the AMT continues to impact a growing number of middle income tax earners. The AMT has its own set of rates and rules which are less generous than regular Nebraska income tax rules and are very confusing. The only way a taxpayer truly knows if they owe the AMT is by filling out their income tax forms a second time using the AMT Revenue Ruling.
As amended, LB 308 also updates Nebraska’s net operating loss (NOL) carry-forward policy, conforming Nebraska state law with federal income tax policy and the majority of the states. Currently, Nebraska has only a 5-year NOL carry-forward policy. LB 308 would extend the NOL to 20 years, benefiting small businesses, agriculture and new ventures, by allowing them more than 5 years to recoup a significant net operating loss.
LB 104, which broadens the Nebraska Advantage Act to give wind facilities a sales tax exemption for the purchase of turbines, towers and other wind-farm components, was given second-round approval by the Legislature. It was introduced in an attempt to attract a wind project to Northeast Nebraska, prior to the scheduled expiration of a federal production tax credit by the end of the year.
Senator Ernie Chambers offered an amendment to LB 104 to repeal the extra one-half cent local option sales tax authority for the City of Omaha only. Under the amendment, other cities in the state would still have the ability to increase their local sales tax to 2 percent. Earlier this year, Senator Chambers had introduced legislation to repeal the extra half cent of taxing authority, but the bill remains stuck in the Revenue Committee. After an unsuccessful attempt to amend his proposal onto LB 308, my priority bill, he offered this altered version of his proposal on LB 104. This time, the amendment was successful.
As we begin the last two weeks of this legislative session, I still encourage you to contact me with your opinions on issues before the Legislature. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My e-mail address is firstname.lastname@example.org and my telephone number is (402) 471-2733.
The Legislature gave first-round approval this past week to a bill that overhauls the juvenile justice system in our state. The intent of LB 561, introduced by Senator Brad Ashford of Omaha, and prioritized by the Judiciary Committee, is to keep more kids out of the judicial system and in effective and appropriate community-based services.
Pre-trial diversion programs hold youth accountable, provide restitution to victims, and link youth and their families with appropriate services. LB 561 would establish a position within the Crime Commission to assist in the creation and maintenance of juvenile pre-trial diversion programs in counties across the state. Funding would be appropriated for the development of community-based care.
Under LB 561, as amended, the number of juveniles sent to the Youth Rehabilitation and Treatment Centers (YRTC) in Kearney and Geneva would be limited to the most severe cases for the protection of the individual or the public. The original version of the bill called for the closure of the facilities. Furthermore, a process would be created for juveniles leaving a YRTC to help youth more effectively reenter their communities with the involvement of their families.
LB 561 shifts responsibility for juvenile offenders from the Office of Juvenile Services within the Department of Health and Human Services to the Office of Probation Administration statewide. Probation officers have already assumed responsibility for offenders in Douglas County and the North Platte and Scottsbluff areas, through a successful pilot project.
Senators also debated tax incentives for wind energy this past week. As amended, LB 104, introduced and prioritized by Omaha Senator Steve Lathrop, amends the definition of “qualified business” for Tiers 2 through 5 of the Nebraska Advantage Act, to include businesses engaged in the production of electricity by using one or more sources of renewable energy to produce electricity for sale. This definition would include wind, solar, geothermal, and hydroelectric energy.
LB 104 was introduced in an effort to encourage the development of renewable energy. It specifically attempts to attract a Kansas company who has expressed interest in building a $300 million wind farm in northeast Nebraska. Nebraska ranks 4th in wind energy potential but lags behind other states in the development of wind farms. LB 104 provides for a refund of the sales tax paid on machinery and equipment at the project location, which will make us competitive with neighboring states regarding wind development. LB 104 was given initial approval on a 30-0 vote.
The formula that distributes state aid to K-12 school districts is a highly controversial issue. State aid to K-12 schools is the largest single recipient of state funds within the budget. The current formula would have resulted in an approximate 11% increase, which is unsustainable considering the other responsibilities of the state. The Education Committee worked on adjustments to the formula, bringing it down to an average increase of about 5% each year of the biennium, which approximates the growth in state revenues.
As debate began on LB 407, the larger districts argued that additional state aid should focus on the schools where most of the state’s students attend, whereas smaller schools feel that they should be awarded a greater portion, as they cannot offer the broad curriculum enjoyed by the larger schools. After it became apparent that there was no agreement on the amendments offered by the Education Committee, the bill was pulled from the agenda. Three days later, after a compromise was reached granting concessions to both the larger and smaller school districts, LB 407 received first-round approval on a 42-0 vote.
A major concern that I have with the present state aid formula is the number of school districts that no longer qualify for equalization aid. Of the 249 school districts, it is projected that 114 districts will receive no equalization aid, although they still receive some state aid, such as income tax rebates and net option funding. As valuations continue to increase, especially for rural landowners, the burden of funding rural schools is falling primarily on our agriculture sector.
Senators have begun to work into the evening most nights of the week. As we debate many issues affecting the citizens of the state, 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 e-mail address is email@example.com and my telephone number at the Capitol is (402) 471-2733.