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Even at this late hour, I have not given up my quest for providing significant property tax relief. What we have passed so far does not provide the relief I had hoped for, but it’s moving in the right direction. So far we have provided $204 million per year for the property tax relief fund and $19.8 million in personal property tax relief.
Property owners will be getting a tax credit total of what amounts to $95.00 per $100,000 of valuation. And, there will be an exemption from property tax on the first $10,000 of valuation of tangible personal property.
I realize this does not fix the problem many rural property owners have with high property taxes. Several of my rural colleagues and I have gotten the message across to the rest of the legislative body that we will not stop asking for a solution in tax relief. What we need is a fundamental change in how we fund education in order to achieve a permanent solution to our high property taxes.
However, lowering property taxes will not be an easy fix. It may come at a price, because as the old adage goes: “You can’t get something for nothing.” There’s no doubt about it, a solution will necessitate a tax shift. I’m sure we could find some cost savings within education’s budget but it will not be enough to provide the property tax relief we are looking for. Some Senators are looking at increasing sales taxes and some are considering eliminating tax exemptions granted by prior Legislatures. There are literally hundreds of exemptions to the state sales tax. I would continue to oppose any sales tax on inputs for any industry.
The way our schools are financed through the Tax Equity and Educational Opportunities Support Act (TEEOSA), over 65% of the property taxes I pay go to finance education. We spend close to one billion dollars administered under the TEEOSA formula and currently only 35% of school districts receive state equalization aid.
In 2013 the Tax Modernization Committee held public hearings across the state and heard from Nebraska citizens that their taxes – specifically, their property taxes – were too high. The first recommendation made by the committee regarding property taxes was to increase the state aid commitment to schools to offset property tax use and reduce property taxes as a share of total state and local taxes.
Separate Legislative Resolutions (LR 344 and LR 332) have been introduced by both the Education Committee and the Revenue Committee to address the recommendation made by the Tax Modernization Committee. Studies will be carried out and public hearings will be held this coming fall. At the conclusion of the studies each committee will report their findings to the Legislature. I am optimistic the information gathered will generate legislation to introduce in the next legislative session.
It’s encouraging to read the list of introduced Interim Study Resolutions dealing with taxes. Some of those include: 1) whether imposition of a sales or income tax upon the sale of agricultural land may provide funding for a targeted property tax relief fund for agricultural property owners; 2) income tax rates; 3) current method of using adjusted property valuation as the primary measurement of local resources in Nebraska’s public education funding formula; 4) procedure for and use of like-kind exchanges under the Internal Revenue Code and their impact on the taxable value of agricultural and horticultural land; procedures and categories used by county assessor to classify types of land for valuation and taxation purposes; and 5) tax revenues for public schools.
A worthy reminder is the 2014 Legislature enacted several proposals that lowered taxes. Military retirees benefitted with a tax exemption of either: up to 40% of their military retirement from state income tax for 7 years, or they could exclude 15% of their military retirement income at age 67 and for all subsequent years.
Indexing brackets in the state income tax code, were implemented at the beginning of this year. It significantly reduced “bracket creep” when brackets are not adjusted for inflation. Exempted was increased income thresholds under which social security income is taxed.
Sales tax exemptions were given for net energy billings for customer-generators of electric service and for agriculture machinery repair and replacement parts used in commercial agriculture. These items account for millions of dollars of tax relief but did little for property taxes. Hopefully next year we will address this issue.
As my first year in the legislature heads into the final weeks of the session, and where some of the biggest issues are waiting, I am starting to see the pressure that is building and how it affects my colleagues. Some of the debates can get a little heated, and what I feel are minor issues can flare into major discussions. The following bills have generated a fair amount of mail from outside the district and some from within.
Two separate bills have been introduced and prioritized this session that would legalize medical marijuana. Both have an end result of treating people with illnesses that can’t be controlled with FDA approved drugs. One is very tightly controlled and would provide good measurable data, and the other would open the door for many more options and is not as well defined, because the end rules are not written until after we pass this bill.
LB 643, introduced by Sen. Tommy Garrett of Bellevue, creates the Cannabis Compassion and Care Act. Dramatically amended by the Judiciary Committee, the bill gives detailed instructions on how manufacturers can operate and sets out restrictions for the use of medical marijuana in the state. The Department of Health and Human Services (DHHS) would then be responsible for developing specific rules and regulations.
It allows medical cannabis to be taken only in liquid form, including oil, by pill or vapor. Any other method, including smoking, would have to be approved by DHHS. Patients would have to be certified to use medical marijuana, to show they have qualifying diagnoses made by a doctor, and whether a caretaker is needed to administer the medication. Certification would be required yearly.
Unless the caretaker is a parent or legal guardian, that person would have to be at least 21, administer the medication to only one patient unless additional patients live at the same residence, submit to a background check and file fingerprints.
Patients would have to register and pay an annual $200 fee to use medical marijuana. From registration information, DHHS would evaluate patient demographics, effective treatment options, and clinical and quality-of-life outcomes. The fee would be $50 for patients receiving Social Security disability or who are in the medical assistance program.
Illnesses or medical conditions the state would allow to be treated with medical marijuana would be limited, including seizures; cancer, if symptoms include severe or chronic pain, or nausea or severe vomiting, or severe weight loss; glaucoma; HIV or AIDS, Tourette’s syndrome; ALS; multiple sclerosis with severe or persistent muscle spasms; Crohn’s disease and terminal illnesses.
DHHS would be allowed to approve any additional delivery method or qualifying illness or condition. Two manufacturers would be allowed to have four distribution centers, which would be located geographically across the state. Local governments would be allowed to put zoning restrictions for distribution facilities. A five-member Medical Cannabis Board will advise DHHS on rules and regulations, medical cannabis policies and any changes to the law as needed.
At the lengthy hearing a number of people shared stories of loved ones with debilitating illnesses such as, Dravet Syndrome, epilepsy, PTSD, Huntington Disease, seizures, and other conditions that current medicines had no effect on. Many testifiers said they received recommendations from doctors and friends, including doing their own research on how marijuana use improved the quality of life for many people who had similar conditions. Most of the testifiers said their life changed dramatically and some were even pain-free after using marijuana.
The other bill, LB 390, introduced by Sen. Sue Crawford of Bellevue, would allow for a pilot study performed by the University of Nebraska Medical Center (UNMC) to explore the safety and effectiveness of using cannabidiol –hemp oil—to treat resistant seizures for about 50 young people.
Twenty-four other states have legalized marijuana in one form or another for specific illnesses.
Governor Ricketts believes the virtues of marijuana are still much debated. He has concerns about both pieces of legislation and that we should wait until there is FDA approval before enacting a state law.
I am willing to support LB390 but not LB643. If results from the UNMC study show promise we could consider expanding the program. Debate on LB 643 began last week and will resume this week.
The Aurora Area Chamber and Development Corporation and myself will be hosting a town hall meeting on Monday, May 11th from 3:00-4:00 PM at the Aurora Senior Center, located at 1205 11th St, Aurora. The town hall is an opportunity for Senator Friesen to visit with constituents about their concerns and to provide an update on legislative issues. This event is open to the public, and anyone wishing to attend is asked to RSVP to the Aurora Area Chamber and Development Corporation by calling 402-694-6911. I hope to see you there!
The Appropriations Committee provided the legislative body with recommendations of their $8.6 billion 2-year budget which is made up of 7 bills (LB’s 658, 659, 656, 657, 660, 661, 662, 663, and 663A).
We began the discussion last Thursday on those recommendations, which include utilizing $55.7 million of Cash Reserve Fund monies for four different items: 1) a $17.2 million to cover payment of IV-E disallowance penalties imposed on the Department of Health and Human Services; 2) $5.5 million transfer to the Republican River Compact Litigation Contingency Cash Fund to pay a court-ordered settlement related to the State of Kansas v. State of Nebraska Republican River Compact; 3) $25 million transfer to the Nebraska Capital Construction Fund for construction at the University of Nebraska Medical Center of the Global Center for Advanced Inter-professional Learning; and 4) $8 million to Coordinating Commission to contract with Creighton University to increase the number of graduates of the dental college which provides reduced-fee and charitable oral health services, oral health workforce development, and oral health services using tele-health. This last item has drawn some opposition on first round and may have trouble staying in the budget.
With approximately $720 million in the cash reserve we will follow the concepts used by the Appropriations Committee in the 2014 session which were that a significant balance should be retained in the Cash Reserve Fund and any use of the Cash Reserve Fund should be for one-time items to match the one-time nature of the financing source.
A $60 million increase in the amount of money transferred to the Property Tax Credit Cash Fund was made a priority of the Appropriation Committee. The $60 million per year transfer totals $120 million over the two year biennium which would place $200 million per year into the Property tax relief fund. This would give a credit of around $94 per $100,000 of valuation. Although accounted for as a transfer and not an expenditure, in terms of using available General Funds, this is the single largest increase in the budget. Of particular interest is the distribution of the property tax credit has increased over the years for the agricultural sector. Since the property tax credit is distributed solely based on valuation, the high growth in ag land values and flat valuation in residential has resulted in a shift in the credit distribution to taxpayers. In 2007, when the Property Tax Credit Fund was created, ag land received a distribution of 24.1%, while residential land received a distribution of 55.7%. In the new budget recommendations ag land is estimated at receiving 44.8%, while residential will be receiving 37.9%.
The committee budget includes funding for state aid to schools (TEEOSA) to fully fund the certified aid for 2015/16 and current estimated funding needs for 2016/17 based on the existing TEEOSA formula. TEEOSA school aid is the largest single spending item accounting for a $79.7 million increase over the two years. Even with this increase there will be no school in District 34 that will receive equalization aid and the number of schools statewide that receive equalization funding will decline.
The appropriation for the Department of Correctional Services is one of the largest increases in the budget. In FY15-16 the increase is 11.2% or $20.3 million. Almost half of this amount is related to inmate medical costs. Health care costs have increased significantly during recent years due to an increase in inmate population, an aging inmate population, inflation, and the new Hepatitis C treatment. The committee recommendation also includes $2.5 million each year for 59 additional security staff and $1.2 million each year for behavioral health staff. These funds are critically important in helping to solve the current overcrowding of our prison system by making sure treatment programs are available to inmates that are in need of mental health programs. Hopefully by providing intense probation and aggressive treatment of the mental health issues, such as drug and alcohol addictions, we can keep these people from returning to prison.
And finally, the committee included a general 3% increase to the University of Nebraska, State Colleges, and Community Colleges. Also funded were several specific items for the University of Nebraska including operation and program costs for the Health Science Education Center ($1,424,000 FY16 and $2,424,000 FY17) and support of the Yeutter Institute for International Trade and Finance ($1,250,000 each year). This program could be the push we need to grow our international markets that our agricultural economy will need to keep us the number one industry in this state.
Budget growth in the proposed budget is 3.8% in FY16 and 2.4% in FY17 for a two-year average of 3.1%. This two year average is virtually the same as the Governors recommendation, and would be the third lowest growth in the last 30 years.
If this budget is approved, $48.9 million will be available for other proposals still under consideration by individual senators. By the end of the day at 8 p.m. we advanced the budget recommendations to the second round of consideration.
The Nebraska Economic Forecasting Advisory Board met on Thursday, as we began debate of the budget bills, with good news to report. They did not have to lower the revenue forecast for the 2015-17 fiscal years as some had been concerned about. In fact, they raised the money that could be available by nearly $10 million. And if current year revenues grow as expected, the state would have $12 million more to deposit into the Cash Reserve Fund. Hopefully the body will not look at these dollars as additional spending opportunities.
Last Thursday I had the opportunity to visit with 50 fourth graders, and their teachers and some parents, from Central City Elementary school. They were here to visit the Legislature and to tour the State Capitol Building. I’m glad they had time to stop and see me also. They asked a lot of questions!