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May 5th was the 77th day of our 90 day session. We are approaching the end of the session, and with that, there are a number of “big item” legislation. This week we worked into the evenings, and while we did get through much of the legislative agenda, there is still a lot of work left to do.
This week we gave final approval to LB 409, introduced by Sen. Mike Groene of North Platte, which adjusts Nebraska’s school funding formula to match budget projections. The bill, which passed 43-0, modifies two components of the formula which we use to distribute school funds.
The bill reduces the base limitation rate – the rate at which school budgets are allowed to grow from year to year from 2.5 percent to 1.5 percent. It also increases the local effort rate, which accounts for a district’s property tax capacity, from $1.00 to approximately $1.02.
The main focus of this week has been to work through a number of budget bills which we need to pass to keep the state up and running. Right now the budget package calls for general fund spending of $8.9 billion, limiting spending growth to about 1 percent and does so without raising taxes – something that was important to me.
Unfortunately, it does draw $173 million from the cash reserve – which has been created as a “rainy day” fund there to ensure we have money. The cash reserve was an integral reason that Nebraska was able to weather the economic down turn a few years ago, and I am not a fan of taping those funds to cover the budget.
I would have liked to have had a more robust discussion about where we could find spending cuts, unfortunately there just was not enough time for us to bring those issues to the floor.
Also this week, LB 461, which would have provided tax relief for taxpayers, failed to achieve the necessary 33 votes to end debate. This was unfortunate as it did end any chance we had to pass meaningful tax reform this year. The debate proved to be tremendously interesting and at times emotional. I appreciate that people on both sides of the issue have contacted me about this issue, and I took their comments to heart.
One thing to remember is that Nebraska was one of the last states to implement a state income tax 50 years ago. Today, Nebraska imposes one of the highest income tax rates in our region. This didn’t happen overnight, and I don’t think it will be solved overnight.
Another criticism of the bill was that it did not adequately address property tax issues.
As I’ve said, I agree that property taxes in our state are an issue. LB 461 did attempt to address property tax values, but for many it did not go far enough. While I still contend that a little property tax relief would have been better than no tax relief, I understand ag land owners’ frustrations.
I do hope this issue will come up again next year. It is a conversation that needs to be had. LB 461 would have provided for a responsible, conditional and step-wise approach to provide tax relief for workers, small businesses, retirees and – yes – ag producers. Now the conversation moves on.
There was an attempt to amend the budget bill with language specifically dealing with property tax. Unfortunately the way the amendment was brought to the floor – at the last minute and without enough time to adequately discuss what was actually in the amendment, it was tabled.