This past week started out being very productive. The Legislature passed the budget bills on Final Reading and sent them to the Governor. He has five days to decide whether to sign them or to line-item veto specific items. The budget bills are the only bills that must pass this year, as the Nebraska Constitution states that each Legislature shall make appropriations for the expenses of the Government.
The Legislature also voted to pull LB 147 from the Education Committee and place it on General File. LB 147 was stuck in committee with a 4-4 vote. The motion to pull the bill was made by the chair of the Education Committee, Senator Mike Groene. It received 25 votes, the minimum required. LB 147 proposes to amend the Student Discipline Act. It would allow an administrator, teacher, or other school personnel to use reasonable physical contact to protect a student, staff, or other person from physical injury. If physical contact is used, school personnel must notify the parents of the student and inform them of the incident. The bill would also require an administrator to remove a student from a class upon request by a teacher or other school personnel if the student’s behavior is so disruptive that it seriously interferes with the learning environment. The goal is to return the student to class as soon as possible after appropriate interventions or supports have been implemented. The teachers’ union is supportive of LB 147, recognizing the need for such legislation. However, administrators have concerns and feel the bill may create more problems than it resolves. I thought it was a good idea to bring the bill to the floor of the Legislature in an effort to encourage the administrators and teachers to work together on a compromise over the interim.
The Revenue Committee worked for months on a proposal contained in LB 289. It provided significant property tax relief by establishing a foundation aid factor in the school state aid formula, guaranteeing that every school district receive at least one-third of its formula needs from state aid. To ensure that the increased state aid resulted in property tax relief, school spending would be limited to the CPI inflation rate plus growth. To provide revenue for the proposal, the state sales tax rate would be increased, a couple of sales tax exemptions eliminated and the sales tax imposed on a limited number of services. During a seven hour public hearing on the proposal, only four people testified in support and more than fifty testified in opposition. The committee worked on revisions prior to advancing LB 289, lowering the proposed increase in the sales tax rate and increasing the number of services taxed, but the larger school districts remained opposed to the proposal. After three hours of debate, the sponsor of LB 289 could not come up with the necessary 33 votes to place the bill on the agenda again, as required by the policy of the Speaker of the Legislature.
After it appeared that LB 289 would not be discussed again this session, Albion Senator Tom Briese offered an amendment to LB 183, a bill already advanced to the second stage of debate. The amendment proposed to place an additional $100 million in the Property Tax Credit fund, bringing the total to approximately $375 million in property tax relief, reflected on a taxpayer’s property tax statement. This amount would be appropriated to the Property Tax Credit fund annually until the school state aid formula is reworked and state aid is increased by at least 20%, thereby incentivizing the Legislature to work on reforming the formula, which is currently too dependent on property tax revenue. To fund the property tax relief, the proposal would have eliminated a number of sales tax exemptions and the personal property tax exemption, while increasing the Earned Income Tax Credit to assist the lower income with the broadened sales tax. After three hours of debate, Senator Briese offered a motion to invoke cloture, allowing for a vote to be taken on the advancement of the bill. However, the cloture motion fell ten votes short and LB 183 was removed from the agenda.
I supported LB 289 and LB 183. Even though I didn’t agree with everything in these bills (I would have preferred further broadening the sales tax base rather than an increase in the sales tax rate), they did present an opportunity to offer property tax relief to Nebraskans. I also supported the passage of the budget bills which contained an additional $51 million in annual funding for the Property Tax Credit fund. Although this past week was disappointing, I will continue to work to bring property tax relief to taxpayers.
I was happy to see that the Nebraska Department of Transportation has awarded the contract to Hawkins Construction of Omaha, allowing them to begin immediate work on the Highway 281 Bridge over the Niobrara River, south of Spencer. A temporary single lane shoofly is anticipated to be in service by August 1, with work scheduled to start on May 28.
As we enter the final week of this legislative session, I encourage you to contact me with your thoughts. 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.
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.