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Tim Gragert

Sen. Tim Gragert

District 40

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Legislative bills proposing to decrease the corporate income tax rate and phase-out the income tax on social security benefits both received second-round approval this past week after amendments were added to require the Legislature to revisit these issues prior to full implementation. This would allow a future Legislature to determine whether revenue is sufficient at that time to carry out the Legislature’s intent.

Under LB 64, taxation of all social security income would be phased-out over a 10-year period.  Nebraska is one of only 13 states to tax social security income. Senators questioned whether the Legislature could afford the $168 million price tag once it is fully implemented. The Appropriations Committee chair offered an amendment that kept the 50% exemption achieved over the first five years in place, but used intent language to increase the exemption from 60% to 100% over the following five years. Even though LB 64 advanced to Final Reading, an amendment may still be offered to impose an income cap.

As advanced from the Revenue Committee, LB 432 proposed to reduce the top corporate income tax rate on taxable income in excess of $100,000 from 7.81% to 6.84%, which is the top individual income tax rate. The intent was to create parity between businesses regardless of the legal form. Subchapter S Corporations and Limited Liability Companies don’t pay corporate income tax. Instead they distribute income to their partners or shareholders, who then pay individual income tax on their distributions. Once again, some senators questioned whether the Legislature could afford this tax decrease and whether it was the best use for this money. Under a compromise amendment, the top corporate tax rate would be reduced in phases, decreasing to 7.5% the first year and 7.25% the second. The final decreases to 7.0% and 6.84% in the following two years are included in intent language. After adoption of this amendment, LB 432 was advanced to Final Reading.

Senators debated LB 474, which proposed to legalize medical marijuana, for eight hours this past week. Senator Anna Wishart offered legislation again this year to adopt the Medicinal Cannabis Act. She worked on the initiative petition last year that collected 196,000 signatures, far more than needed to place it on the ballot despite the hardship in gathering signatures due to the pandemic. Although the Secretary of State approved the proposal for the November 2020 ballot, a lawsuit was filed at the last minute, alleging that the initiative language violated the single subject requirement of our constitution. The lawsuit was successful and the initiative was removed from the ballot. Senator Wishart told of broad support for the ballot measure from all areas of the state, from all age groups, and across the political parties. She predicted that another ballot measure will be successful and that it will be approved by voters if LB 474 is not passed by the Legislature. Although focused on “medical marijuana”, the initiative petition may simply refer to “marijuana”, to make sure the single subject provision is not violated again. This could open Nebraska up to recreational marijuana as well.

Thirty-six states have comprehensive medical cannabis programs or have fully legalized cannabis for adult nonmedical and medical purposes. An additional 11 states allow the use of low THC high CBD products for medical reasons in limited situations or as a legal defense. This leaves Nebraska, Arkansas, and Kansas with no medical cannabis program.

LB 474 was described as the most conservative medical marijuana legislation in the United States. Under LB 474, patients must have a qualifying medical condition and written certification issued by a health care professional, with whom they have a bonafide relationship. The written certification must be renewed every 90 days. Health practitioners must perform a physical exam on patients prior to providing a certification for medical cannabis, complete continuing education requirements, and are limited in the number of certifications they can issue. Patients could possess no more than 2.5 ounces of cannabis and must purchase it from state-licensed dispensaries, which are prohibited from selling edible products. Patients could not smoke it or operate a vehicle while under the influence. Furthermore, municipalities could ban or adopt zoning restrictions on the locations of medical cannabis businesses, although the receipt of mailed products could not be prohibited.

This was a difficult issue for me. I have heard from and met with parents, pleading for the ability to use marijuana as an alternative for harsh drugs with terrible side effects for their children who were experiencing severe seizures. However, the cloture motion on LB 474 was not successful, meaning that LB 474 will not be debated again. The Legislature won’t have the same control over how an initiative petition is implemented.

Senators are meeting into the evenings as we attempt to finish our business prior to the end of session. I still encourage you to contact me with your opinions on the issues before us. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE  68509. My email address is tgragert@leg.ne.gov and my telephone number is (402) 471-2801.

Sen. Tim Gragert

District 40
Room 11th Floor
P.O. Box 94604
Lincoln, NE 68509
(402) 471-2801
Email: tgragert@leg.ne.gov
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