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This past week, the Legislature discussed the line-item vetoes made by the Governor on the budget bills. His vetoes amounted to approximately $44 million in federal, state, and cash funds over the next two years. The Appropriations Committee recommended that approximately $14 million in line-item vetoes be overridden, representing approximately 85% of the general fund vetoes, 70% of the vetoes in cash funds, but allowing the vetoes of federal funds to stand. The Legislature voted in support of the committee’s recommendations.
The Legislature voted to override line-item vetoes of state funding for CASA (Court Appointed Special Advocate) grants, increased salaries for county court employees, additional aid for the Learning Community in Douglas and Sarpy counties, and funding for a Dental Health Director within the Department of Health and Human Services, which has been vacant since 2009 and has resulted in the loss of federal funding. The Governor’s veto of funding for the UNMC College of Nursing Lincoln facility, renovation of the Museum of Nebraska History and improvements in the State Capitol were also overridden. The College of Nursing facility in Lincoln will be partially funded with savings from a University capital project previously undertaken. The renovation of the Nebraska History Museum is intended to keep it in compliance with mechanical and electrical codes and ADA regulations.
Individual senators attempted to override additional line-item vetoes, including increased funding for the State Auditor’s office, the Supreme Court, and the railroad track inspection program. However, only the motions to override offered by the Appropriations Committee were successful.
Although LB 613, which proposed to create the Tax Modernization Commission, was introduced earlier this year, it gained momentum after public hearings were held on the Governor’s proposals to eliminate or reduce the income tax. Taxpayers from across the state objected to the proposal which would have eliminated popular sales tax exemptions to compensate for the reduction in income tax revenue. Many citizens voiced their opinion that high property taxes are a more prevalent problem.
During debate on LB 613, Senator Ernie Chambers suggested that the tax study could be accomplished through a resolution rather than by statute. He proceeded to introduce LR 155, which was adopted by the Legislature this past week. LR 155 creates the Tax Modernization Committee comprised of the members of the Revenue Committee, the chair of the Appropriations, Health and Human Services, Education, Agriculture, and the Legislature’s Planning Committee. In addition, the Executive Board will select two other senators to serve on the committee. The purpose of the study is to review and evaluate the state’s tax laws regarding the sales, income, and property taxes, as well as other miscellaneous taxes, credits, and incentives. The resolution states that community involvement is essential to the success of the study and encourages the participation of the public. The committee is to issue a report to the Executive Board by December 15, containing any recommendations to update state, county and local tax policies.
In discussing LR 155, Senator Galen Hadley, who will serve as the chair of the Tax Modernization Committee, emphasized that the study will not result in sweeping tax reductions. He stressed that the mission of the committee is to determine if there is equity in our current tax system. I thought it was important that he mentioned our state’s high property taxes when he spoke of the challenges before the committee.
The Legislature is finishing up this year’s business and is scheduled to adjourn on June 5. Again, I encourage your input. 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.
Cities are allowed to impose a local option sales tax on their communities. As of last year, approximately 200 communities had authorized a local option sales tax rate of up to 1.5 percent. This is on top of the state sales tax rate of 5.5 percent. Last year, legislation was passed, in spite of a Governor’s veto, to allow cities to increase their local option sales tax to a maximum of 2 percent. Three communities have voted to take advantage of this increase in local tax revenue – Alma, Sidney and Waterloo. Voters in Nebraska City and Bellevue rejected the proposed increase.
This year, Senator Ernie Chambers of Omaha introduced LB 266, which would repeal the increased tax authority for communities. The bill had a public hearing before the Revenue Committee in February but was not advanced to the floor of the Legislature. Late last month, Senator Chambers filed a motion to place LB 266 on General File. When discussing the motion this past week, the allotted time on the agenda expired before a vote was taken on the motion. Senators did mention that an amendment is pending on LB 613, the comprehensive tax study, that would place a moratorium on this increased taxing authority pending the outcome of the study.
Lawmakers voted to advance LB 216, a bill introduced and prioritized by Senator Amanda McGill of Lincoln. This bill proposes to establish the Young Adult Voluntary Services Act. Former state wards between the ages of 19 and 21 could voluntarily request continued services from the state. The primary costs associated with the bill would be for housing assistance and case management. In an effort to reduce the estimated $3.3 million dollar fiscal impact in each of the next two years to less than $1 million per year, an amendment was adopted to limit the program to foster children that were abused and neglected. Federal funds are available in addition to the state general funds. The bill aims to replace a current program that was not well-utilized for state wards that “age-out” of the system. To be eligible, youth would have to be enrolled in post-secondary education or working 80 hours per month. LB 216 provides a support system for vulnerable youth, in an effort to improve long-term outcomes in education, employment and housing stability.
This past week, the Legislature also discussed LB 637, which was introduced and prioritized by Senator Norm Wallman of Cortland. If the Nebraska Department of Environmental Quality intends to adopt a rule or regulation that would impose requirements different than federal regulations or increase costs on regulated persons or entities, the department would have to prepare a statement that describes the annual economic impact of the rule. I spoke on the floor regarding the significant effect more stringent state regulations can have on local entities, thus showing why I am supportive of the proposed additional requirements placed on DEQ.
Senators gave first-round approval to LB 57, introduced and prioritized by Senator Tyson Larson. Under LB 57, an applicant who uses grant funding from the Environmental Trust Fund to purchase real property, and subsequently seeks to transfer such property to a federal land management agency, which transfer would result in the removal of the property from the tax rolls, shall have such transfer approved by the Environmental Trust Board. The contract would also have to provide information on how the taxes to the county would be replaced.
The Clerk of the Legislature’s office coordinates an annual Unicameral Youth Legislature, which will be held June 9-12, 2013. The four-day camp is a legislative simulation for students, ages 14-17, in which they take on the role of lawmakers. Student senators sponsor bills, conduct committee hearings, debate legislation and discover the unique process of the nation’s only unicameral. The Unicameral Youth Legislature is jointly sponsored by 4-H and the University of Nebraska Big Red Summer Camps program. More information on the details can be found at www.nebraskalegislature.gov/education/unicamyouth.php.
The Speaker of the Legislature announced this past week that we will start working into the evening most nights in April, with even later nights expected in May, prior to adjournment in June. As we debate bills that have been prioritized, 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 is (402) 471-2733.
The Legislature spent the better part of the mornings this past week debating a bill calling for a comprehensive study of our tax system. As amended, LB 613 creates the Tax Modernization Committee, whose purpose is to review and study the state’s tax laws, including, but not limited to, sales taxes, income taxes, property taxes, and other miscellaneous taxes and credits.
The Tax Modernization Committee would be comprised of the Revenue Committee members and the chairs of the Appropriations, Health and Human Services, Education, Agriculture, and Planning Committees. The committee is to consider fairness, competitiveness, simplicity and compliance, stability, adequacy and the interrelationships of the tax systems within the state revenue system as a whole. The importance of public input is recognized in the legislation and the committee is authorized to hold public hearings.
A report is to be issued by December 15, containing recommendations to update state, county, and local tax policies and to identify areas of concern that require further in-depth analysis and study.
LB 613 gained steam after LB 405 and LB 406 were introduced at the request of the Governor. The legislation called for the elimination or the reduction of income taxes, as well as the repeal of certain sales tax exemptions granted to business, agriculture, hospitals and other nonprofit groups. Due to an outcry from the public, both bills were killed by the Revenue Committee and LB 613 was advanced to the floor of the Legislature by the Executive Board.
Senator Ernie Chambers filibustered LB 613 because he was upset that several bills were being advanced to alter current taxes in light of the pending study, but the Revenue Committee did not advance a bill that he introduced to repeal LB 357, which was passed last year allowing for a local option sales tax rate of up to 2 percent. He offered numerous amendments to LB 613, slightly changing the wording of the legislation. After eight hours of debate and a successful cloture motion, LB 613 was given first-round approval on a 47-1 vote.
I support LB 613 because I feel that it is time to review the tax system. Over the years, new taxes and fees have been put in place, other taxes have been repealed, rates have been adjusted, and exemptions have been granted, but no one has looked at the whole picture to determine how the different parts work together. Times have changed over the past decades and our tax system needs to reflect those changes, while remaining competitive with other states.
An amendment is pending for the second stage of debate that would place a moratorium until July 15, 2014 on the imposition of a local option sales tax in excess of 1 ½ percent, which was the maximum amount allowed prior to the passage of LB 357 last year. Any tax rate above 1 ½ percent that was approved by electors prior to the effective date of the legislation would be allowed to remain in effect. I assume the intent of the proposed moratorium is to prohibit additional towns from utilizing the increased rate while the comprehensive tax study takes place. The amendment also places a moratorium on any new occupation tax or any increase in the rate of an existing occupation tax.
The public hearing process has been completed for this year. Full day debate will begin on March 27th and continue through the last day of the legislative session, which is set for June 5th. During this time, senators will try to discuss as many priority bills as possible and must pass a biennial budget. If you have any comments on bills that have been given priority status, I encourage you to contact me. My address is 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.
Earlier this month, the Appropriations Committee heard testimony on a bill that would transfer $40 million from the Cash Reserve Fund to Natural Resource Districts with integrated management plans that have entered into contracts to construct or implement streamflow enhancement projects. Under LB 185, the loan would be repaid by June 30, 2018 with proceeds of the occupation tax. The authority to levy an occupation tax was granted by the Legislature to NRDs several years ago.
Four NRDs (the Upper Republican in Imperial, the Middle Republican in Curtis, the Lower Republican in Alma, and the Twin Platte in North Platte) worked together and purchased 19,500 acres of land. The plan was to take some farmland out of irrigation and to pump water into the Platte and Republican Rivers, in order to remain in compliance with the Republican River Compact (a 1943 three-state compact with Colorado and Kansas) and the Platte River Recovery Implementation Program. The initial financing of the project was planned to be through the issuance of bonds with repayment being the proceeds of the occupation tax on irrigated lands collected by the four NRDs. However, a lawsuit was filed late last year by individual irrigators and two irrigation districts. Since the NRDs are unable to proceed with bonding authority while a lawsuit is pending, legislation was introduced to request a loan from the state.
After overwhelming opposition to the Governor’s proposal to fund the elimination of the individual income tax and the corporate income tax by repealing certain sales tax exemptions, Governor Heineman has asked the Revenue Committee to kill his proposal. This is a good example of the importance of input from the citizens of our state, showing that your opinions do have an impact on state government.
Amid all the opposition, the Governor did bring to light a topic that needs to be addressed. Since our tax code has not changed significantly in approximately 45 years, now is the time to have that discussion. LB 613, introduced by Senator Paul Schumacher of Columbus, was heard before the Executive Board this past week. It proposes to create a Tax Modernization Commission. The intent is to not only look at the income tax, but also study the sales tax, the property tax and other issues affecting state revenue, such as tax incentives. Under the proposal, a preliminary report is to be issued to the Legislature by December 15 of this year, in time for the introduction of legislation in the 2014 session. The legislation envisions an open process for the study, requiring the Commission to hold a tax summit, develop online questionnaires, and conduct public hearings across the state.
One of the bills that the Health and Human Services Committee heard this past week was LB 507, introduced by Senator Kathy Campbell, the chair of the committee. Under LB 507, the Step Up to Quality Child Care Act, the Nebraska Department of Education and the Department of Health and Human Services would be required to develop a quality rating and improvement system for child care and early childhood education programs. The purpose of the legislation is to bring accountability for the public funds invested in such programs. Under the proposal, the system would be available to all child care and early childhood education programs, but participation would be required for programs that receive significant amounts of public funds. In 2012, 43,000 children qualified for publicly-subsidized child care and licensed providers were paid more than $94 million in child care subsidy payments. It is imperative to ensure that the care the state supports is of high quality.
I encourage you to contact me with your opinions on legislation of interest. 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 e-mail address is email@example.com.