The Legislature concluded its work for the 2014 legislative session on April 17. We made progress on several fronts to reduce Nebraskans’ tax burden and made a significant commitment of new resources to improve water policy. We also renewed investments in K-12 education and enhanced economic development and job creation efforts.
Reducing Nebraskans’ tax burden has been a high priority for this Legislature. We devoted a great deal of time over the past sixteen months to find ways to do more with less in government. The Legislature’s Tax Modernization Committee, of which I was a member, undertook a comprehensive study of our tax code as well as the tax codes of all the other states in the U.S. We toured the state border-to-border last summer and fall to receive public testimony from Nebraskans on where they felt taxes were out of line. All three major taxes (property, income, sales) had deficiencies that we identified for correction.
On property taxes, we were able to increase the State Property Tax Credit program by nearly 22% percent; to a total of $140 million per year. We also expanded the pool of those eligible for the homestead exemption program to include more modest income seniors and disabled Nebraskans.
On income taxes, we indexed the individual income tax brackets for inflation, ending “bracket creep.” We provided an income tax exemption for Social Security benefits ($58,000 exemption for married families filing taxes jointly; up to a $43,000 exemption for all other filings). We also exempted some military retirement income benefits from taxation, depending on certain conditions.
On sales taxes, we exempted agriculture repair parts from taxation. We also exempted certain precious metals purchases that are used as retirement investments. We also clarified that postage is not subject to sales tax when certain conditions are met.
It is estimated that these tax reduction efforts will provide over $400 million in relief over the next five years. None of us feel our work is done on the tax burden reduction effort and we will give great priority over the upcoming interim to figure out how to further reduce property taxes in Nebraska. We are also committed to exempting more military retirement benefits in the next legislative session. Good work was done this year to reduce property, sales, and income taxes, but more work remains.
The Legislature also made a large commitment of new resources to better tackle challenges in Nebraska regarding floods, droughts, and water quality issues. LB 1098 was passed to increase the membership of the Nebraska Natural Resources Commission and provide increased grant and matching funds to local private landowners and local government units who partner in efforts to store water during wet years, better utilize limited water resources during drought years, and improve water quality for all water users (agricultural, residential, commercial, industrial, etc.). Over $30 million will be available by mid-2015 to make investments in the most promising initiatives.
We renewed our state’s impressive commitment to public education by passing LB 725. This bill ensures that over $930 million will be provided for state aid to education next year. This is in addition to the over $200 million in special education aid. Our state’s young people need and deserve a quality education and the state must partner with local school districts and communities to see that this is offered.
The Legislature continued its efforts to help businesses expand and grow by extending the Nebraska Advantage programs for two more years. These initiatives have led to businesses commitments of nearly $11 billion in investment and more than 28,000 jobs since 2006. We also refined and expanded our research and development tax credits and other economic development assistance programs. Our state’s economy is the envy of many other states in the U.S. and we must continue efforts to further enhance and expand it.
Please continue to share your thoughts with me on state issues of interest to you. I can be reached at 402.471.2625, email@example.com, and District 15, State Capitol, Lincoln, NE 68509.