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Legislative Update – February 5, 2018
Senator Roy Baker – District 30
The Legislature continues in its routine of morning debate on bills carried over from last year, and is starting to see bills from this year enter the floor debate as they advance from committee. Right now most of the bills being discussed from last year tend not to be controversial. These bills were not taken up last year because time ran out as priority bills took precedence and non-prioritized fell by the wayside. So it is a good thing when we can spend the first few weeks of this session discussing some of those non-priority issues.
Afternoons are taken up by committee hearings. This past week one of my bills, LB 907 was heard by the Revenue Committee. I have written about this bill in the past but on February 1, the proponents of the bill had the opportunity to speak to the merits of the bill at the committee hearing. LB 907 attempts to clarify language in the statutes indicating what types of agriculture machinery and equipment would be exempt from taxation. A District 30 constituent who builds livestock enclosures for farmers and ranchers stated the Department of Revenue did not previously tax items such as ventilation system that ensure proper air movement through a facility, or shutters or curtains to regulate temperature. These items are meant to protect the health and safety of the animals. Additional local ag producers and ag industry leaders also testified in support of the bill. The committee asked questions regarding the potential fiscal impact to the state budget, my response was that the department only started to charge tax recently and therefore the impact should be minimal. The fiscal note prepared by the Legislature’s Fiscal office, with information also provided by the Department of Revenue, has a significant fiscal impact. Now it is up to the committee members to decide if the bill has merit.
The Revenue Committee also heard testimony this week on the Governor’s property tax and income tax bill, LB 947, offered by Senator Jim Smith who is also the Chairman of the Revenue Committee. The bill would provide Nebraska homeowners and agricultural or horticultural land owners a refundable state income tax credit equal to 10 percent of property taxes paid beginning this year. This credit is available for only Nebraska residents. The bills caps the credit at $230 this year but could increase if state revenue exceeds forecasts. It is capped at $730.
The income tax portion of the bill would reduce the top individual income tax rate from 6.84 percent to 6.75 percent in 2019 and 6.69 percent in 2020. Any decrease to the income tax rate would only occur if the revenue exceeds forecasts.
The corporate tax rate for businesses with income in excess of $100,000, would decrease from 7.81 percent to 6.75 percent in 2019. The rate would decrease to 6.69 percent by 2020. For businesses with less than $100,000 would remain at rate of 5.58 percent.
The Legislative Fiscal office said the bill would cost the state in lost revenue about $2.7 million in fiscal year (FY) 2018-19, increasing to $86 million in FY 2019-20 and eventually cost $463 million by FY 2027-28. My concern is the programs that will need to be eliminated by the loss of this revenue. This bill is difficult to consider when the state is facing close to another $200 million budget shortfall on top of last session’s budget cuts totaling close to $1 billion to achieve the constitutionally required balanced budget. The Revenue committee will work to put a package together and we will wait and see what finally comes to the full legislature for consideration.
I would encourage you to follow the legislature by accessing information on line or receiving the Unicameral Update which is a weekly publication during session. You can call 402-471-2261 for more information or access the Unicameral Update at: update.legislature.ne.gov.
To contact my office directly, use 402-471-2620 or email@example.com. I welcome your communication.