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The 107th Legislature, Second Session is drawing to a close and last week brought passage of many big ticket items and transformational bills that were debated this session.
The biggest of those is the comprehensive tax cut package, which I was a strong supporter of. Senator Friesen’s LB873 had many different bills and proposals amended into it. LB873 will lower the state’s top income tax rate of 6.84% to 5.84% over five years and cut the state’s top corporate income tax rate to 5.84% from 7.81% by tax year 2027. LB873 also completely phases out state income taxes on Social Security by tax year 2025, adds a new refundable income tax credit for property taxes paid to community colleges starting in tax year 2022. And LB873 will avoid a $200 million drop in state income tax credits for property taxes paid for K-12 schools from the property tax fund created in 2020’s LB1107. When fully implemented, LB873 would cut state taxes by $900 million at the end of five years. This is a big win for the state of Nebraska, especially for our seniors with the elimination of social security taxes. It will also make Nebraska’s tax climate more competitive with our neighboring states.
Last week all of the budget bills were signed into law, including LB1011 – the budget adjustment bill, LB1012 – the funds transfer bill, and LB1013 – the cash reserve transfer bill. We passed a record-setting $9.8 billion budget package that incorporates some of the Governor’s priorities, including money to start work on a canal and reservoir system in western Nebraska and a possible lake between Omaha and Lincoln. It also will boost pay to private providers caring for those in nursing homes and foster care. The budget package will draw from a record-high cash reserve fund to pay for nearly $500 million worth of building and infrastructure projects. Even after those projects, the cash reserve is expected to hit a record-high $1.3 billion by June 2023. Also included are funds for improvements at Lake McConaughy in Keith County and Niobrara State Park along with Lewis and Clark Lake. The package also includes funding to take the next steps toward creating a 7-mile lake along the Platte River between Lincoln and Omaha. The legislature voted to override the Governor’s line-item vetoes on the budget to secure funding for a hike in provider rates, community corrections programs, urban housing and completion of a bike-hike trail.
The last big piece of legislation I want to mention is LB1014, the Nebraska allocation of American Rescue Plan Act (ARPA) funds bill that passed Final Reading last week and awaits the Governor’s signature at the time of writing. When signed, the bill will go into effect immediately. The state has received $520 million and an additional $520 million is anticipated by May 2022. The bill’s expenditures support COVID-19 mitigation efforts, respond to negative economic impacts of the pandemic, replace lost revenue, provide premium pay for essential workers and fund water, sewer and broadband infrastructure projects. Among the appropriations are for shovel-ready projects (at least three in district 32) for qualifying sports complexes and nonprofits, workforce housing and for water transportation infrastructure grants. The bill also contains provisions of more than 20 proposals introduced this session, including my request for almost $10 million for grants to small meat processors.