The Legislature gave second-round approval to the budget bills this past week, which will allow them to be read on Final Reading by the 80th legislative day (May 22), as required by legislative rules. The only amendments that were adopted were offered by the Appropriations Committee and were primarily technical in nature.
Senators began debating LB 720, the ImagiNE Nebraska Act. LB 720 would provide tax benefits to companies that invest or increase employment by a specified amount. The topic of tax benefits versus the cost of tax incentive programs has been a topic of discussion for years. Back in 1987, the Legislature passed LB 775, the Employment and Investment Growth Act, in an effort to keep ConAgra from leaving the state. In 2005, a comprehensive revision of LB 775 was passed. The Nebraska Advantage Act focused on making Nebraska more attractive for starting and growing a business, added a rural component, promoted higher paying jobs, and provided more transparency.
The purpose of LB 720 is to increase the value of the program through better investments, better jobs, more robust reporting, and more overall transparency. The legislation would simplify the process and direct applications to the Department of Economic Development, rather than the Department of Revenue, in an attempt to build stronger relationships with businesses. It also proposes a new revolving loan fund to accelerate tax credits into front-end loans for job training and site development. The intent of LB 720 is to spend no more than what Nebraska Advantage spends on average, which is approximately $150 million annually. The legislation shortens the benefit period to 15 years (rather than 26 years), thereby providing greater predictability for the state’s budget.
In order to be competitive with other states, tax incentives are an important factor for Nebraska. As businesses evolve, programs need to be updated. However, I feel that the Legislature should pass a property tax relief measure before determining how LB 720 fits into the process. Senators are still working on LB 289 and on alternative approaches and are hopeful that property tax relief will be on the agenda again in the near future.
Two bills that the Legislature debated for three hours this past week, but appear unlikely to be on the agenda again this year, are LB 670 (private school scholarships) and LB 110 (medical marijuana). LB 670 proposed to create a state income tax credit for taxpayers who contributed to private school organizations for education scholarships. The credit could offset up to 50% of their tax liability. The decrease in revenue due to the tax credits was capped at $10 million the first year. If 90% of the credit was used each year, the cap could grow by 25% annually.
LB 110, which would adopt the Medicinal Cannabis Act, was advanced from the Judiciary Committee last week on a 5-1-2 vote. Committee amendments substantially tightened the original bill. The amendments require a patient to be examined by a doctor, physician assistant, or advanced practice registered nurse with whom they have a bona fide practitioner-patient relationship. If the patient has a qualifying condition (such as cancer, epilepsy, Parkinson’s disease, terminal illness, or PTSD), the practitioner would complete a certification, which the patient could take to a dispensary to receive cannabis or cannabis products. The amendments also significantly reduce the allowable possession amount to 2 ½ ounces of cannabis or cannabis products containing no more than 2000 mg of THC, prohibit the growing of marijuana at home, and prohibit the smoking of cannabis. An Enforcement Department and Medicinal Cannabis Board would be created to oversee and regulate the process.
The Governor has made his opposition to LB 110 known, emphasizing that UNMC has conducted research supporting successful clinical trials for Epidiolex, which is a cannabidiol derivative from marijuana that was recently approved by the Food and Drug Administration to treat seizures. LB 110 would circumvent this system of FDA approval, thereby putting public health at risk. Supporters of legalizing medicinal marijuana have already begun gathering signatures on a petition initiative they hope to place on the 2020 general election ballot if the Legislature doesn’t pass LB 110.
As we enter the final weeks of this legislative session, I encourage you to contact me with your thoughts and opinions. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is firstname.lastname@example.org and my telephone number is (402) 471-2801.
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 email@example.com. 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 firstname.lastname@example.org and my telephone number is (402) 471-2801.