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The Legislature gave first-round approval this past week to a $9.3 billion biennial budget for fiscal year 2019-20 and 2020-21, which consisted of seven bills advanced to the floor by the Appropriations Committee. The ending balance is $2 million above the required minimum 3% reserve. The fiscal impact of LB 300, which proposes to increase the salaries of judges, is approximately $2 million. If LB 300 is passed, there will be little to no funding for other legislation with a fiscal impact. In developing the budget proposal, the Appropriations Committee had to come up with an additional $45 million to bring the minimum reserve back to 3%, which had been lowered due to budget constraints during the last biennial budget.
The average budget growth over the two-year period is 3.0%, which is slightly lower than the Governor’s recommendation. One of the largest growth factors in the budget is the $50 million in funding for Medicaid expansion, which was placed on the ballot through an initiative petition and approved by Nebraska voters. The budget contains a 3.1% per year average increase in total general fund aid for K-12 school districts, amounting to almost $1.3 billion each year, or approximately 28% of our general fund budget.
The projected balance of the Cash Reserve Fund will fall to $372 million by the end of the biennium, representing approximately 7.5% of annual state revenues. Fiscal experts have recommended a target of 16%, which gives the state some cushion in case of an economic recession. The status of the Cash Reserve Fund includes a transfer of $54.7 million for two additional high security housing units under the Department of Correctional Services, in an attempt to deal with prison overcrowding and to allow the transfer of high-risk inmates from the Tecumseh State Correctional Institution to Lincoln, where staff are more available. However, the Appropriations Committee also recommended transferring $25 million each year to the Cash Reserve Fund instead of fully funding the Governor’s recommendation to increase appropriations to the Property Tax Credit Fund by the full $51 million each year, for a total of $275 million in annual funding. Although senators realized the importance of rebuilding the Cash Reserve Fund, they argued that it shouldn’t be done with funding for property tax relief. An amendment to block this transfer was successful on a 28-8 vote.
In addition to the new correctional facilities, the budget also contains $2.5 million each year to expand capacity at problem-solving courts, such as drug courts. These courts, which offer a lower cost alternative than prison, focus on early intervention, appropriate treatment, intensive supervision and consistent judicial oversight.
Another issue that was a priority for the Appropriations Committee was provider rates, which are paid to the various providers in the Department of Health and Human Services’ programs. During the previous biennium, provider rates were either cut or frozen. Although the Governor recommended a 2% increase for long term care providers, the Appropriations Committee’s budget proposal includes an average 2% per year increase for all providers. Additional funding was included for nursing homes, in order to adjust for recent negative inflation factors used in the calculation of their rates.
The Legislature debated LB 289 for three hours this past week. LB 289 is the Revenue Committee’s proposal for property tax relief. According to the Speaker of the Legislature’s policy, the sponsor of LB 289 will have to prove that she has 33 votes, in order for LB 289 to be placed on the agenda again. The Revenue Committee is working on possible adjustments to their proposal in order to gain the approval of the necessary number of senators. I voted for the increase in the funding for the Property Tax Credit program during the budget debate and I’m hopeful that we can pass a proposal containing additional property tax relief. Although I can justify a sales tax increase if it results in significant property tax relief, I would prefer removing more exemptions and broadening the base of the sales tax, rather than an increase in the sales tax rate.
I encourage you to continue to contact me with your thoughts and opinions on the issues before the Legislature. I can be reached at firstname.lastname@example.org. My address at the capitol is District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509 and my telephone number is (402) 471-2801.
This past week, the Revenue Committee advanced LB 289, giving the full Legislature the opportunity to discuss property tax relief this session. The Appropriations Committee presented their recommendations for the next two-year budget to the Legislature as well. These two issues will be our primary focus during the remaining twenty days of this legislative session.
As amended, LB 289 contains an additional $500 million for state aid to schools. The amendment contains caps on spending, in an effort to assure that the increased state aid results in significant property tax relief. Furthermore, the valuation of property would be reduced by 10% of its actual value. To fund the property tax relief measure, the sales tax rate would be increased by one-half percent to 6%, lower than a previous recommended increase to 6.25%. The cigarette tax would be increased by 36 cents a pack and sales tax exemptions would be removed on candy, pop, bottled water, and ice. In addition, a couple dozen services that weren’t previously taxed would now be subject to taxation under the proposed amendment. Some of the services that would be taxed but haven’t been mentioned before include hair, nail and skin care, tattoos, parking, motor vehicle repair, dry cleaning, lawn care, and taxi rides. Approximately half of the current $224 million appropriated to the Property Tax Credit program would be dedicated for the increased state aid. Two senators on the Revenue Committee abstained from voting on the advancement of the amended version of LB 289, signaling that it will be a controversial discussion on the floor.
Governor Ricketts issued his first veto of the year this past week. LB 472 was introduced by Senator Myron Dorn, who represents Gage County. LB 472 allows a county board to impose a one-half cent sales tax to pay a judgment rendered against a county by a federal court for violation of federal law. The increased sales tax authority is intended to help Gage County, who must pay more than $28 million in damages to six men and women wrongly convicted in a homicide of a woman in 1985. The Governor opposed the measure that would increase the local sales tax without a vote of the people. Currently the county is paying these costs through property taxes alone, which falls disproportionately on rural residents. This legislation would help even the burden to all taxpayers in the county. The governor’s veto was easily overridden on a 41-8 vote, eleven votes above the thirty votes required.
Legislation was introduced to increase the age for using vapor products or e-cigarettes to 21 years of age, in an effort to reduce the use of vaping among high school students. It also would require a license to sell these products, as is required for those selling cigarettes and other tobacco products. The General Affairs committee amendments reduced the age to 19, but included all tobacco products. Advocates for vaping promote it as a way to help cigarette smokers quit, but others are concerned that the fruity flavor options are being marketed to kids. LB 149 received first-round approval with a 40-0 vote.
There have been many rumors regarding the offer of a floating bridge from South Dakota to be used over the Mormon Canal. I have visited with the Governor’s office and top officials from the Nebraska Department of Transportation. They have seriously considered this option, but found that it is far more complicated than appears on the surface. They also fear that it could actually extend the timeframe of the permanent bridge. The department hopes to have the contractor working at the site by the first of June, if not before. I realize this is a severe hardship, but trying to stay as positive as possible will help everyone involved. Please feel free to contact me and I will assist you in any way I can. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number is (402) 471-2801.
Our office received word this past week that Boyd County has been included in the disaster declaration, making federal funding available for individual assistance. Knox County had previously been included, as well as the Santee Sioux Nation. To apply for individual assistance, call FEMA at 1-800-621-3362 or register online at www.DisasterAssistance.gov. This is in addition to the counties and tribal areas that have qualified for public assistance.
The Legislature debated LB 227 for six hours this past week before advancing it to the second stage of debate. LB 227, introduced by Venango Senator Dan Hughes, amends the Nebraska Right to Farm Act (NRFA), which protected farmers against nuisance lawsuits brought by individuals who move into agricultural zoned areas. Although the NRFA protected farmers if they were there first, it did not protect them if any changes took place on the farm. Under current law, even the conversion of a non-irrigated farm to an irrigated farm or a transition of the operation within the family could remove the defense provided by the NRFA. LB 227 sought to remedy this.
LB 227 applies to the following situations: the conversion from one type of farm operation to another, a change in ownership or size of the operation, the enrollment in a government program, or the adoption of new technology. An amendment adopted in an effort to resolve concern expressed over neighbor’s rights, would allow lawsuits during a two-year period following any of the changes listed in the bill. If a subsequent change is made, the two-year period would start over. Farmers would still have to comply with county zoning and environmental regulations before any change could take place. Furthermore, lawsuits could be filed at any time if reasonable techniques to mitigate negative effects on the property of others are not employed. Prior to advancement of the bill, the sponsor pledged to work on additional amendments to resolve concerns with the bill.
The amendment that I referred to last week, allowing property taxes to be prorated for victims of a natural disaster, was adopted by the Legislature and LB 512 received first-round approval. I supported the amendment as I think it is unfair that property owners would have to pay property taxes for an entire year, if their home is destroyed part way through.
Another bill discussed this past week, LB 334, proposed to eliminate the Angel Investment Tax Credit program, which hasn’t been very successful, and instead transfer the funding appropriated to the Business Innovation Act. The Business Innovation Act funds grants and loan programs that encourage innovation and startup businesses in Nebraska. The chair of the Revenue Committee suggested that the $4 million appropriation should be used to replenish the Governor’s Emergency Cash Fund, which has dwindled from $5 million to $400,000 due to the recent flooding. Many senators, including myself, supported this suggestion. However, since the $4 million appropriation would not be available until next year, the Appropriations Committee voted to put $6 million in general funds into the emergency fund for the upcoming fiscal year and then use the $4 million plus an additional $1 million, to replenish the emergency fund in 2020-21.
The Revenue Committee has been working on a proposal to share with the full Legislature regarding property tax relief. They plan to hold a public hearing on their amendment to LB 289 on Thursday, April 18. The Education Committee and the Nebraska Retirement Systems Committee will join the Revenue Committee for the hearing. Possible components of the proposal include increasing the sales tax by ½ cent, eliminating the sales tax exemption on pop and candy, charging sales tax on plumbing and moving services, increasing the cigarette tax by 36 cents a pack, reducing the valuation of agricultural land for property tax purposes from 75% to 65% of its value and residential and commercial property from 100% to 90%, and adding a foundation aid component to the school state aid system.
My priority bill, LB 243, was passed by the Legislature on a 43-0 vote. It creates a task force that is to develop a healthy soils initiative and action plan. Another bill that I introduced, LB 406, was passed last month with the emergency clause, meaning that it went into effect when the Governor signed it. LB 406 updated statutes dealing with unclaimed property to ensure claimants receive all the unclaimed property rightfully due to them. The State Treasurer’s office recently notified me that the changes made in the law have already begun to simplify certain processes within their office. There is more than a half million dollars in unclaimed property in District #40. A list of unclaimed property can be found at: https://treasurer.nebraska.gov/up/. If your name is listed, the website also contains information on how to file a claim.
I would like to commend the North Central Sports Club, composed of student-athletes from Rock County High School in Bassett and Keya Paha County High School in Springview, for foregoing their spring trip and instead sending the money to a Verdel family that was severely impacted by the flood.
As the Legislature debates controversial issues, I appreciate hearing from constituents as to their views on the bills. I can be reached at firstname.lastname@example.org. My telephone number is (402) 471-2801 and my mailing address is District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.