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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.
This past week marked the deadline for the designation of priority bills. Every senator may designate one bill as his/her individual priority bill. Every committee can designate two priority bills and the Speaker of the Legislature has the authority to designate twenty-five bills as speaker priority bills. After this point in the session, bills without priority status do not stand a good chance of being debated unless they are noncontroversial and meet the criteria for consent calendar. Consent calendar is a tightly structured process whereby noncontroversial bills without opposition have a chance at passage.
I selected LB 308 as my personal priority bill because it will provide tax relief. LB 308 proposes to repeal Nebraska’s alternative minimum tax (AMT). Nebraska is one of only nine states with its own AMT. This tax was originally designed to capture revenue from high-income earners, but over the last decade, it has been a threat to more middle class taxpayers. The AMT adds complexity to our tax code, due to its own set of rates and rules for deductions.
LB 308 was recently advanced from the Revenue Committee, with committee amendments that contain the provisions of LB 457. LB 457 addresses the Net Operating Loss (NOL) carry forward tax policy, which allows losses to be deducted against past and future profits to measure profitability over a period that more closely corresponds to a business’s investment horizon. The amendment would extend the carry forward deduction period for ordinary operating losses, lengthening the provision from 5 years to 20 years. All but 5 states have a NOL carry forward time-frame greater than 5 years. The committee amendments to LB 308 would bring Nebraska in line with the federal corporate income tax policy and the majority of states on loss carry forwards. This will help improve Nebraska’s business tax climate, allowing small businesses, new ventures, high-tech businesses and manufacturers additional time for investment and employment growth.
Other bills that have been given priority designation include: LB 96 exempts repair or replacement parts for agricultural machinery and equipment from the sales tax; LB 362 changes the fee for state park permits to a registration fee on motor vehicles; LB 393 repeals the helmet law for motorcyclists 21 years of age and older; LB 439 increases the cigarette tax; LB 543 repeals the death penalty; LB 561 restructures the juvenile justice system; LB 517 creates the Water Sustainability Project Task Force; LB 577 expands Medicaid as allowed under the federal Affordable Care Act; and LB 613 creates a committee to conduct a comprehensive study of our tax system, including sales, income and property taxes.
In February, I held open houses in several locations in the eastern portion of Legislative District #1. On Saturday and Sunday, March 23 and 24, I plan to hold open houses in the western part of the district. At 8:00 a.m. on Saturday, I will be at the Little Brown Jug Coffee Shop in Pawnee City; at 10:00 a.m. at Frazier’s Cafe in Tecumseh; and at 1:00 p.m. at Scott’s Cafe in Sterling. On Sunday, I will be at the Palmyra Activities Center at 1:00 p.m. I encourage you to stop by on March 23 or 24 so that I can get the chance to meet you and to hear your thoughts on issues that are before the Legislature.
My contact information is District #1, P.O. Box 94604, State Capitol, Lincoln NE 68509. My e-mail address is email@example.com and my office telephone number is (402) 471-2733.