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The first session of the One Hundred Fourth Legislature came to an end on May 29. While I am disappointed my priority bill (LB 357) to reduce taxes for families and businesses did not make it to the floor for debate, I am pleased major transportation-related issues were tackled.
Most importantly, the Legislature approved a bill guaranteeing funds for our transportation infrastructure. As the chairperson of the Transportation and Telecommunications Committee, I am keenly aware of the immediate necessity to address over $10 billion in highway needs and to repair nearly 3,000 structurally deficient bridges. I introduced LB 610 to incrementally increase the gas tax by 6 cents over a four-year period. Federal highway funds are becoming unreliable and our state gas tax rate has remained flat for over 20 years, not keeping up with inflation.
Our transportation infrastructure is integral to keeping and attracting businesses to grow our state’s economy. I believe the most appropriate way to ensure we have adequate funding is to tax those who use our roads, including those who travel through the state. Without the fuel tax, the only funding options are either increasing property taxes or diverting General Fund dollars from other government services, such as education and Medicaid.
Another significant transportation bill was LB 629, which regulates ride-sharing operations. In the past few years, transportation network companies have been cropping up across the world and have proven to be a popular transportation option. Uber and Lyft both began operating in Nebraska over a year ago, despite not having authorization to operate in the state. While I generally support the free market principle of limited government, it became clear from other states’ experiences some sort of regulatory oversight was necessary to protect the public who use the service, as well as the drivers who provide the rides. After long and often-contentious negotiations, all interested stakeholders agreed to the provisions of LB 629, including requirements for vehicle inspections, background checks and liability insurance.
Finally, LB 623 was passed by an overwhelming majority of the Legislature to allow drivers licenses for immigrants who qualify under the federal Deferred Action for Childhood Arrivals (DACA) program. Prior to the Legislature’s action, Nebraska was the ONLY state that denied licenses to DACA grantees. We were in danger of becoming uncompetitive in the global market by obstructing a significant portion of our workforce. LB 623 had the backing of large array of groups, including the State Chamber of Commerce, the Omaha Chamber of Commerce, the Lincoln Chamber of Commerce, the Farm Bureau and the Nebraska Cattlemen.
While it was a great accomplishment get these critical matters addressed, many important transportation issues remain for the Transportation and Telecommunications Committee. Over the legislative interim, the committee will be conducting a comprehensive study of our roads system, which will include an examination of our funding sources, allocation and use of those funds by local governments and the structure and efficiency of the Nebraska Department of Roads. The study will include public hearings throughout the state.
Though the Legislature is not in session again until January 2016, my office remains open year-round, and I encourage you to contact me at (402) 471-2730 if you have any questions or concerns regarding your state government.
The Legislature gave final approval to a two-year budget that holds the line on spending as well as gives money back to the taxpayers. Nebraska’s Constitution requires the state to have a balanced budget, which the Legislature establishes on a two-year cycle. The biennium budget passed this year covers fiscal years that begin in July 2015.
Our Appropriation Committee’s initial budget recommendation largely mirrored the one proposed by Governor Ricketts. It focused on funding necessary government functions, including education, Medicaid and correctional services, promoting economic development and limiting increases in expenditures. The average growth of the two-year $8.6 billion budget package was only 3.1%, which is one of the lowest growth rates in the last 15 budget cycles.
Early in the budget debate, the Nebraska Economic Forecasting Board delivered an unexpected surprise, projecting better than anticipated revenues in the coming years. The Legislature demonstrated fiscal restraint and agreed to send the money back to taxpayers. An extra $8 million was added to the already approved $60 million annual increase to the Property Tax Credit Fund. Each year, a total of $204 million in the fund will be dispersed to property tax payers to offset the taxes paid to fund local government bodies such as school districts and counties.
I applaud Governor Ricketts and the Appropriations Committee for bringing forth a responsible budget – one that did not promote wasteful government spending and instead gave money back to whom it belongs; the taxpayer.
The 2015 session has reached the halfway point, and soon we will be spending full days on the legislative floor debating and voting on the many bills introduced this year. For the first half of the session, we have split our days with floor debate in the morning followed by committee hearings in the afternoon. As required by the Nebraska Constitution, public hearings are held on each bill introduced. This year, 663 proposals were brought forth.
While not all 663 bills are advanced from the committee for consideration by the full Legislature, hundreds are deemed worthy of extended discussion. Given that there are only 90 days in the session, the time constraints make it impossible for the Legislature to take up every measure. In order to assure the most important issues are debated, senators are allowed to designate one bill as a priority. This session, three of my bills have been designated as priorities.
I am grateful Senator Curt Friesen of Henderson has prioritized LB 610, which is a bill I introduced that would provide much-needed funding to our transportation infrastructure. The bill would increase the portion of our gas tax that goes to fund our state, city, and county roads and bridges. While I consider myself a fiscal conservative, I have firsthand knowledge (as Chair of the Transportation and Telecommunications Committee) of our immense infrastructure needs and the huge funding gap that exists.
Roads and bridges are the lifeblood of Nebraska. Businesses and industries, including agriculture, recognize a well-maintained infrastructure is needed to move produce from farm to market; to transport freight and product; and to move passengers and employees. In addition, good roads provide incentive for businesses to expand and locate in Nebraska. This infrastructure is vital for emergency services and national security and is a basic necessity for our everyday life. That said, functional roads and bridges are neither free nor cheap.
Consider this: in order to just maintain the nearly 100,000 miles of roads and 20,000 bridges, it costs almost a billion dollars every year. Because our aging bridges across the state have been neglected for so long, Nebraska has the seventh highest percentage of structurally deficient rural bridges in the nation. It is estimated it will cost over $800 million to bring our bridges up to safety standards.
Yet while we have these growing costs, funding for these necessities has not kept up. The federal Highway Trust Fund is declining and losing its value, gas prices have dropped, and cars are becoming more efficient. The state’s current tax on fuel, 25.6 cents, has increased by only one cent in the past 22 years. Neighboring states are in a similar bind – Iowa has just increased its gas tax by 10 cents per gallon and South Dakota raised its tax by 6 cents.
LB 610 takes a very modest and responsible approach. The tax would increase by 1.5 cents every year for just four years for a total of 6 cents. As far as taxes go, the gas tax is probably the most fair because it is based on usage. Those who utilize the roads more will pay more, including those non-Nebraskans traveling through out state.
But not all taxes in Nebraska are fair. As I mentioned in my previous post, I introduced LB 357 to address our excessively high personal and business income taxes. Nebraska has one of the highest top income tax rates compared to our neighbors, putting us at an economic disadvantage for attracting businesses and individuals to fill new jobs. LB 357 would lower the tax brackets over a period of eight years, protecting vital state services while putting funds back in the hands of taxpayers. In addition, LB 357 would provide property tax relief by increasing the amount of money that goes into the Property Tax Credit Fund.
I believe in an overall tax policy that adequately provides for essential government services but does not unfairly burden our businesses and families. For that reason, I have selected LB 357 as my personal priority for this year. LB 357 and LB 610 together make a sound tax policy that will move this state forward for years to come.
2015 Session Underway
The Legislature convened in January and I was elected as the new chairperson for the Legislature’s Transportation and Telecommunications Committee. For the past six weeks I have been responsible for ensuring the 50 bills that have been referred to the committee are scheduled for public hearings and discussed by the committee’s eight members. The committee decides whether the policy proposed in each bill merits consideration by the entire Legislature and either votes to advance a measure, indefinitely postpone it, or hold it until a later date. This process will continue until mid-March.
In addition to these new duties, I am still responsible for the twenty pieces of legislation I have personally sponsored, many of which are related to the transportation and telecommunication industries. This session, I was honored to assist the Nebraska Sesquicentennial Commission by sponsoring the Sesquicentennial License Plate bill (LB 220). A yet to be unveiled license plate will be available for those who want one from October 1st of this year through 2022. The specialty plate will provide the Commission with a valuable fundraising tool as it prepares for the celebration of Nebraska’s 150th anniversary of statehood in 2017. The bill passed unanimously and has already been signed into law by Governor Ricketts.
While LB 220 passed easily, another bill I introduced will present a challenge but will have a greater impact on our state. LB 357 would provide much-needed tax relief to all Nebraskans. The bill would include income tax cuts for individuals, families and businesses as well as bolster our Property Tax Credit Fund.
The Tax Foundation’s 2015 State Business Tax Climate ranks Nebraska in the bottom half of all states with respect to our tax policies. Compared to surrounding states, Nebraska has one of the highest top income tax rates, making it difficult to compete for new businesses and jobs. Over 30 states have already or are in the process of considering tax reform and it is imperative we act now or risk falling behind in economic opportunities.
LB 357 would take a measured approached to ensure any tax cut is paid in full and does not harm essential services. Tax reductions for all brackets would be slowly phased in over a period of 8 years, bringing the top bracket down from 6.84% to 5.92% and the lowest bracket from 2.46% to 1.23%. Continued growth in revenue could trigger further reductions. In addition to the personal income tax cuts, LB 357 would reduce the tax burden on businesses and would increase the amount of credit property owners receive on their tax bills. A majority of these tax cuts would be offset by reducing government spending growth by 1 percent annually, while a very small portion of the lost revenue would be replaced through the state’s Cash Reserve Fund. This savings account is at a record high of over $700 million dollars. That is $700 million dollars of taxpayer dollars that should go back to the taxpayers.
For nearly 150 years, Nebraska has flourished and grown into a state for which we can be proud. With the passage of LB 357, we can continue to grow and with the passage of LB 220, we can display the pride we have in our state, Nebraska.
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