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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.
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.