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March 29, 2018 – Legislative Update
Senator Roy Baker – District 30
In these closing days of session, we often hear criticism of the legislature for leaving so many contentious bills to be debated until the waning days. However, the sheer fact that the bills are controversial is the reason they are late in coming to the floor for debate. Legislative committees are where many of the disagreements on the bills are hashed out and adjustments made. Committees continue to meet on those bills long after the public hearing is over, to work on amendments and try to reach an accord. Often times consensus is reached, which makes the discussion on the floor easier. However, there are times when committee members do not reach agreement and eventually forward the bill to the full legislature to allow the entire body to debate the issue and ‘let the chips fall where they may’.
An example of a controversial bill that was stalled in committee and ultimately advanced to the floor was LB 640. Currently under Nebraska law, real estate owners in Nebraska receive state tax credit toward their property tax bills. Sen. Mike Groene’s LB640 would remove those tax credits and redirect the $220 million plus in the property tax credit fund to public school districts. The tradeoff in the bill would be lowering school districts’ statutory levy maximum from the current $1.05 per $100 valuation to $0.987.
When the bill came up on the agenda for debate on March 27, I led the opposition to LB 640.
First, there would be winners and losers under this proposal. A key provision of the bill says the only school districts to qualify for property tax relief aid are those that receive more than 55% of their general fund receipts from property taxes. In District 30, that leaves out the Beatrice and Lincoln school districts. In general across the state, school districts with higher enrollments are more likely to have general fund levies over $1.00 per $100 of valuation and those districts are more apt to receive equalization state aid and thus, likely receive less than 55% of their revenue from local property taxes.
Secondly, LB 640 provides state funding to equalized districts to backfill part of the gap created by dropping the statutory levy cap. Over the past 20 years, the State has only been able to fully fund TEEOSA (state aid) three times. It takes a leap of faith to think the state will be able to do so in the future, especially in light of LB947, which calls for a lowering of income tax rates.
If LB640 were to pass, the $0.987 levy cap would be ensconced in state statute. If Nebraska were unable to provide the replacement funding, the levy cap would remain in statute and would likely require 33 (of 49) senators to vote to change the levy cap, which might prove to be very difficult to accomplish. School districts would then be in the position of needing to do one of two things: procure a favorable vote of patrons to override the levy cap; or, make cuts in school programs that the majority of parents and patrons value.
Another controversial bill, the state budget bill, LB 944, became bogged down, due primarily to 14 lines in the bill that spelled out restrictions for the use of Federal Title X funds. Late on March 28th, a compromise amendment regarding the Title X language was adopted, and the legislators overwhelmingly advanced the budget bill to final reading. Final approval will likely occur during the first week of April and the bill will be sent to the Governor.
Another bill with the potential for hours of debate is LB 947 dealing with property and income tax reductions. Members of the Revenue Committee have very differing views on the efficacy of the proposed cuts, and concerns about the long-term impact such cuts will have on the state in future years. These fundamental differences in how the legislature provides property and income tax relief will carry over to the debate on the floor.
With eight legislative days remaining at this writing, much work and debate lay ahead. Whether in session or not, your correspondence is always welcome. You can contact me at 402-471-2620 or firstname.lastname@example.org. You can watch the Legislature in session on educational television or livestream the debate by clicking on the NET icon on the right side of the web page at www.nebraskalegislature.gov.