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The public hearing on the amendment to LB 289 that contained the Revenue Committee’s proposal for property tax relief was held April 24th before the Revenue, Education, and Retirement Committees. The public hearing started at approximately 4:00 p.m., after the Legislature adjourned early, and finished at 11:00 p.m. More than sixty people spoke at the hearing, with only four testifying in support of the measure.
Senator Lou Ann Linehan, the chair of the Revenue Committee, explained the amendment, which was introduced in an effort to provide long-term property tax relief for all Nebraskans. Nebraska places well among states in per pupil K-12 school spending. However, in terms of state funding as a percentage of overall funding, we rank 46th. Unsurprisingly, Nebraska ranks 3rd from the highest for local funding of our schools. With the proposed amendment, Nebraska would increase from 46th to 20th, when comparing state support for K-12 schools with other states. The proposed amendment would establish a foundation aid factor, amounting to a per student state revenue contribution of $3,474 per student for the 2019/2020 school year. The proposal would also lower the local effort rate in the school state aid formula and reduce the valuation of property by ten percent. It guarantees that every school district will receive at least one-third of its formula needs from state aid. School spending would be limited to the CPI inflation rate.
Most of the testifiers commended the committee for their work on property tax relief, but proceeded to criticize the portion of the plan that affected them or the people that they represent. The largest school districts warned that it would reduce their funding, realtors fought the increase in the documentary stamp fee, veterinarians feared the imposition of sales tax on services for pets, farmers resisted the loss of the Property Tax Credit program, cities lamented the reduction of property tax revenue, grocery store owners rejected the collection of sales tax on candy, pop and bottled water, and convenience store owners opposed the increase in the cigarette tax.
From studies I’ve seen, Nebraska ranks high in property tax burden among the states, about average in income tax burden, and somewhat low in sales tax burden. The proposed amendment to LB 289 seeks to increase the state’s sales tax rate from 5.5% to 6.25%, eliminate a couple of sales tax exemptions, and tax a limited number of services, in order to fund the property tax relief measure. I would rather see further broadening of the sales tax base than an increase in the sales tax rate.
In light of the opposing testimony, the Revenue Committee is meeting in executive session in an attempt to alter the funding sources for the property tax relief plan. Discussions have included retaining the current Property Tax Credit program (that gives $224 million worth of relief to taxpayers and is reflected on their property tax statements), eliminating more sales tax exemptions, and lowering the proposed sales tax increase.
The Legislature debated Senator Ernie Chambers’ annual bill to repeal the death penalty this past week. After approximately three hours of debate, LB 44 failed to advance to the second stage of debate on a 17-25 vote. In 2016, voters overturned the Legislature’s repeal of the death penalty. Most senators felt it was too soon to attempt to change this, as it would ignore the will of the people.
I am continuing to work with local officials, NEMA and the Department of Transportation on the bridge projects and water issues, due to the recent flooding. I can assure you that state officials have prioritized these projects.
The Legislature will start meeting into the evening in order to get our work accomplished by the early part of June. I still encourage you to contact me with your thoughts and opinions on legislation before us. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My telephone number is (402) 471-2801 and my email address is firstname.lastname@example.org.
The public hearing to be held by the Revenue Committee, the Education Committee and the Nebraska Retirement Systems Committee on the property tax relief proposal, scheduled for April 18, was cancelled, due to the amendment to LB 289 not being ready in time. The hearing has been rescheduled for Wednesday, April 24 and the 82-page amendment was filed a week in advance, as required by legislative rules. The amendment could be further amended, based on testimony received at the hearing, prior to LB 289 advancing to the full Legislature.
Under the proposed amendment, a foundation aid factor would be added to the school state aid formula. Schools would receive $3474.40 for each student next year, resulting in every school receiving at least a third of its funding through state aid. Currently, more than two-thirds of school districts receive no equalization aid from the state and are funded primarily with property tax revenue. A lid would be placed on school spending, based on the consumer price index and growth within a school district.
The valuation of property will be reduced by 10%, with the valuation of residential and commercial property dropping to 90% and agricultural land to 65% of its value. The local effort rate in the school state aid formula will drop to 90 cents. The proposal represents a 50% increase in state funding for K-12 schools, resulting in $500,000 in property tax relief, which is projected to decrease school property taxes on average by 20%. The proposal would be funded by a ¾ cent sales tax increase, an increase in the cigarette tax to $1.00 per pack, the removal of some sales tax exemptions, including pop, candy, and bottled water, as well as taxing plumbing, heating and air-conditioning services, services provided by moving companies, and veterinarian care for pets.
Immediately after the amendment was filed, Governor Pete Ricketts issued a press release calling the proposal the largest tax increase in Nebraska history. He also criticized the elimination of most of the funding for the Property Tax Credit program.
The Legislature gave initial approval this past week to LB 657, the Nebraska Hemp Act. The passage of the 2018 Federal Farm Bill legalized the growth, cultivation, and processing of hemp across the country. Hemp is drought resistant, can serve as a rotational cash crop, and cannot contain over 0.3% THC. This is the chemical that produces the marijuana high. The legislation creates a process for farmers and cultivators to test their crop for THC compliance to ensure it complies with the Farm Bill.
Under LB 657 as amended, the hemp research pilot program authorized a couple years ago, based on the 2014 Farm Bill, would be expanded to enable wider participation for the 2019 growing season. LB 657 would provide the structure needed to prepare and implement a state plan to conform to the 2018 Farm Bill for the 2020 growing season and beyond. Other states around us have already passed legislation authorizing hemp and we need to get on board, in order to give farmers the opportunity to benefit from this crop.
The Legislature also gave first-round approval to LB 693, which adopts the Neighbor Spoofing Protection Act. The sponsor of the bill worked with the Attorney General’s office and the Public Service Commission on the legislation. The intent of the bill is to reduce the number of calls persons receive from numbers similar to their own, in a deliberate attempt to con people into answering the call. Supporters of the bill acknowledged that this would not entirely resolve the problem because many spoofing calls originate from the Internet or overseas and cannot be traced. LB 693 is patterned after a Kansas law and is among the growing attempt by states to place some constraint on this annoying practice, while Congress works on the issue as well.
LB 155, which as introduced, attempted to prevent public power districts from using eminent domain for the benefit of private wind companies. LB 155 fell two votes short of advancement earlier this session. After it was prioritized a second time, LB 155 was placed on the agenda again. The sponsor of the bill, Senator Tom Brewer, offered a compromise amendment, which resulted in the bill easily receiving first-round approval. The amendment would give landowners who didn’t want a connecting line across their property a chance to argue against it in court.
The Legislature has passed the two-thirds mark of this session. As we continue to discuss bills with priority status, 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 email@example.com and my telephone number is (402) 471-2801.