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Tim Gragert

Sen. Tim Gragert

District 40

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Many major issues were dealt with this past week in the Legislature, with the most significant being the passage of LB 873. When fully implemented, LB 873 will result in almost $900 million in annual tax relief. The legislation sets a floor for the refundable income tax credit of $548 million in 2022 and $560.7 million in 2023. This guarantees an approximate 25% refund for property taxes paid to school districts. Additionally, a similar income tax credit will be implemented for property taxes paid to community colleges. Funding for this portion will begin at $50 million this year and increase to $195 million in 2026. The funding for these refundable income tax credits will continue to grow annually by the statewide valuation growth, capped at 5%.

In addition to property tax relief, LB 873 also contains income tax relief. The top income tax rate for both individuals and corporations will be reduced to 5.84% and the tax on Social Security income will be completely phased out by tax year 2025. I was proud to be able to vote in support of such a significant tax relief package.

The Legislature overwhelmingly overrode all but one of the Governor’s line-item vetoes in the budget bills. The Legislature built into the budget a 15% increase in provider rates to help providers address severe worker shortage issues, partially due to a significant increase in pay for similar state positions. The Governor reduced funding from Developmental Disability, Medicaid, Medicaid Nursing Facility, Child Welfare, and Community Corrections Providers Rates to an approximate 5% increase. With the successful override motion, the full 15% increase in provider rates was restored.

Senators passed LB 1014 on a 40-4 vote. It specifies how the $1.04 billion in federal American Rescue Plan Act (ARPA) funding will be spent. Included within LB 1014 is $7 million for the Cedar Knox Rural Water Project.

The Legislature debated LR 264, a constitutional amendment proposing to eliminate the property tax, the state income tax, the sales tax, and the inheritance tax. These taxes were to be replaced with a consumption tax on new goods and services, with no exemptions for items such as medical services, new homes, groceries, or repairs. The consumption tax rate was projected to be 8.97%, but this figure was disputed by a research tank, which predicted the tax rate would have to be approximately 20% to be revenue neutral.

LR 264 CA was debated for several hours before a vote was taken on the advancement of the proposed constitutional amendment. Twenty-five votes are necessary for advancement, but only nineteen senators supported the bill, with fourteen voting against it. Although I felt that any proposal which addresses property taxes warrants discussion, there were many unanswered questions associated with this tax proposal. There will be an interim study to explore best practices for the implementation of a consumption tax in Nebraska.

Another bill that failed to advance was LB 920, the prison reform bill. The legislation attempted to address our state’s severe overcrowding problem by enacting the recommendations identified through an analysis of our correctional system conducted by the Crime and Justice Institute. Several of the items were controversial and some senators viewed them as soft on crime. After eight hours of debate, a motion was made to invoke cloture so that a vote could be taken on the advancement of the bill. Thirty-three votes are necessary, but the motion only received 26 votes, meaning that the legislation will not be debated again.

The same fate occurred with LB 933, which would ban abortions in Nebraska if Roe vs. Wade is overturned this summer by the United States Supreme Court. However, the cloture motion for LB 933 was almost successful, falling only two votes short. I was a co-sponsor of LB 933 and was disappointed that it was filibustered and didn’t advance.

During these last few days as the Legislature votes for the final time on many bills, I encourage you to contact me with your thoughts and opinions. I can be reached at tgragert@leg.ne.gov. My mailing address is District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509 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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