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Sen. Dan Watermeier

Sen. Dan Watermeier

District 1

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Legislative Update

March 13th, 2014

The Legislature gave first-round approval to the budget bills that make adjustments to the biennial budget passed last year. The Appropriations Committee’s recommendations result in a net increase of $27,739 over the two-year period. However, this does not take into account other legislation with a fiscal impact. If all bills pending on the second and third stage of debate would happen to pass, spending would grow by approximately $44.5 million.

The Appropriations Committee’s budget recommendations included funding for increased costs due to prison overcrowding, funding to serve additional persons with developmental disabilities that are on the waiting list, increased funding for grants for the early childhood education program, and increased funding for our Medicaid match rate, due to a lower federal match rate, which is calculated based on a comparison of our personal per capita income compared with other states. These increased costs were almost entirely offset by reductions in expenses, such as lower costs than projected for the homestead exemption program and the state aid formula for schools.

Bills pending that could increase the spending above the Appropriations Committee’s recommendations include LB 725, which proposes to move the scheduled decrease in the local effort rate (LER) in the school state aid formula up one year. The LER was increased during the budget cutting years of the recession. LB 725 would add approximately $33 million to the budget. LB 986 proposes to increase the number of people that qualify for the homestead exemption by raising the income brackets.

Under the Appropriations Committee’s recommendations, the projected ending balance of the cash reserve fund is $697 million. Committee members made it a priority to leave a sufficient amount in the cash reserve fund, as this is what helped sustain our state during the recent recession, preventing the necessity of raising taxes when revenues fell. Furthermore, the committee emphasized that any use of the cash reserve fund should be for one-time items and not for projects requiring on-going support.

The Appropriations Committee recommended $65 million in transfers from the cash reserve fund. This includes $20 million for water projects, $15 million to state parks, $10 million for job training, $5 million to county jails to ease the burden of prison overcrowding, and $15 million for improvements at the State Capitol, including the replacement of the HVAC system, which is 50 years old and has outlived its predicted lifespan.

During debate on the budget bills, Senator Galen Hadley, chair of the Revenue Committee, offered an amendment to increase funding for the Property Tax Credit program by $20 million, in addition to the $25 million already proposed by the Appropriations Committee. His amendment lost on a 20-18 vote. The Property Tax Credit program was enacted in 2007 and has been funded at $115 million annually since 2008. Currently, a homeowner receives a $60.88 credit per $100,000 of value. The credit will increase to $74.11 under the committee’s proposal, but would have increased to $84.70 per $100,000 of value if the amendment would have been successful.

In addition to the property tax relief offered through the increase in the Property Tax Credit program and an expansion of the Homestead Exemption Program, the Legislature also gave first round approval to LB 987. This bill proposes to adjust individual income tax brackets for inflation and increases the number of persons who won’t be liable for income taxes on their social security income.

With approximately a month left in 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 and my telephone number is (402) 471-2733.

February 7th, 2014

Public hearings were held on five of the bills that I introduced this past week. I also introduced two more bills on behalf of the Legislative Performance Audit Committee, of which I serve as vice-chair.

The public hearing for LB 1033 was held before the Appropriations Committee. The legislation seeks $2.1 million in appropriations for Arbor Lodge State Historical Park. The funding would be used for deferred repairs and maintenance projects, and to bring the facility up to ADA standards. The intent is to transfer the operation and maintenance of the park from the state to a local partnership comprised of state and local entities. The appropriation would cover the projects the local partnership felt was necessary to make the transfer feasible. The current temporary closure of the park reiterated the need for a permanent solution.

Even though the hearing was held in the middle of a snowstorm, numerous supporters from the Nebraska City area made the trip to Lincoln to show their strong support and commitment to this project. The expertise, dedication, and enthusiasm expressed by representatives of the partnership will allow for innovation and greater utilization of the facility. Nebraska is the home of Arbor Day, a holiday now celebrated in every state, as well as many countries throughout the world. Arbor Lodge, the home of J. Sterling Morton who was the founder of Arbor Day, has great historic significance to our local area and beyond. It is our responsibility to make sure this site is preserved, well-maintained, and accessible to the public in future years.

The public hearing for LB 850 was held before the Revenue Committee. It proposes to expand the homestead exemption program to individuals with a developmental disability. Currently, the program is available to persons over 65, persons with certain permanent physical disabilities and disabled veterans. I believe that persons with developmental disabilities, who meet the income and valuation guidelines, are also deserving of and should qualify for this property tax relief program. By living in their own home, rather than a group home, not only does it allow them more independence, it also could reduce expenditures for the state. Two individuals who could qualify under LB 850 for the homestead exemption came to Lincoln to testify in front of the committee and did an excellent job.

Since the Department of Health and Human Services does not keep statistics on the number of individuals with developmental disabilities that own their own home, the executive director of Region V Services conducted a poll among providers across the state. He estimated that approximately 46 people might qualify for the homestead exemption. Of those 46, Region V supports 22 people who own their own homes, many of whom live in the Auburn area. The Department of Revenue, however, estimated that more than 400 persons would qualify under LB 850, greatly increasing the fiscal impact of the bill. The department based their estimate on research done by the University of Colorado.

LB 898, which was introduced by the Performance Audit Committee, and heard before the Health and Human Services Committee, proposes to codify reporting requirements for ACCESSNebraska in statute. In a recent performance audit of ACCESSNebraska, we identified several serious problems reflected in key efficiency measures, including call wait times, busy signals, and the backlog of work duties. The new reporting requirements will allow HHS and the Legislature to better target areas where problems are occurring.

The Legislature gave first-round approval this past week to LB 725, which deals with the state aid formula to K-12 school districts. The local effort rate in the formula was set to decrease for the 2015-16 school year, after it had been increased during the recession years. A reduction in the local effort rate increases the amount of state aid provided to school districts because the formula assumes a district has decreased resources. When next year’s formula was calculated, it ran lower than budgeted, primarily due to increased agricultural land valuations. Therefore, LB 725 proposes to move the decrease in the local effort rate up a year. Since most of the school districts that I represent have a good portion of agricultural land within their boundaries, many are experiencing losses in state aid next year. Without LB 725, the reductions would have been even greater.

If you have any comments on these bills or others before the Legislature, I encourage your input. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is and my telephone number is (402) 471-2733.

Sen. Dan Watermeier

District 1
Room #2108
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2733
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