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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.
My priority bill, LB 243, received second-round approval this past week on a 46-1 vote, after a lengthy debate that had nothing to do with the legislation. It is now ready for Final Reading. Under LB 243, a Healthy Soils Task Force would be created, whose purpose is to develop a comprehensive plan to promote more widespread use of healthy soil practices among farm and ranch landowners and operators in Nebraska in order to improve the health, yield and profitability of the soil, increase its carbon sequestration capacity, and improve water quality. I have already received letters from several people across the state, expressing their desire to serve on the task force. If the bill passes, I will pass their information on to the governor, who will appoint the task force members.
LB 15, which creates the Children of Nebraska Hearing Aid Act, received first-round approval on a 39-0 vote. The bill requires individual or group health insurance policies to provide coverage for children under the age of nineteen that includes hearing aids and associated services. The bill caps the benefits paid for hearing aids and services during the prior two-year period at $3,000. The bill would not apply to small employer group plans or policies providing limited-benefit coverage. Furthermore, health insurance plans are exempt if the cost of coverage exceeds 1% of all premiums collected under the plan. Thirty-one senators, including myself, signed on as co-sponsors to the bill, introduced by Bellevue Senator Carol Blood. LB 15 was designated as a speaker priority bill.
The Legislature began debating LB 483, which changes the way agricultural land is valued for property tax purposes. Currently, ag land is valued based on market sales. LB 483 proposes to value such land at its agricultural productivity value, which considers how much income can be earned off the land. Some of our surrounding states use a similar method of valuing ag land. The intent is not to reduce property valuations, but to provide for a fairer system. Governor Ricketts has expressed his support for the measure. However, some concern was expressed as to the constitutionality of the proposal. Our constitution allows ag land to be valued differently, but it has to be uniform and proportionate within the class of agricultural and horticultural land. Since the proposal caps valuation at the 2019 values, there was also concern that this is not a good year to serve as the base, with valuations that have just started to drop and with low commodity prices. The Legislature debated LB 483 for three hours. The sponsor of the bill, Senator Steve Erdman, will now have to show the Speaker that he has thirty-three votes in order for the bill to be placed on the agenda again.
The Legislature discussed at length an amendment to a Department of Revenue clean-up bill, LB 512, introduced by Elkhorn Senator Lou Ann Linehan. The amendment contains the provisions of LB 482, which would prorate property values for property tax purposes if a property becomes destroyed by a natural disaster. The current system unfairly taxes property owners for property which has been destroyed. This proposal became far more significant after the March flooding and is one way the Legislature can help Nebraskans who have experienced the devastating effects from the flood. I spoke in support of the amendment on the floor of the Legislature. I realize that counties and cities could experience reduced revenue for a short period of time, which will be difficult, but local governments have access to more federal public assistance than do individual homeowners. The sponsor of LB 512 will also have to show the speaker that there are thirty-three senators in support to continue the debate on this bill.
The Revenue Committee continues their work on a tax relief package that they hope to have completed by mid-April. Some ideas being discussed are more than doubling the state dollars allocated for property tax relief (currently $224 million), lowering the top corporate income tax rate, increasing the state sales tax rate, eliminating the sales tax exemption on pop, candy and bottled water, and raising taxes on tobacco, to bring them more in line with surrounding states.
The Nebraska Department of Transportation has developed a website, allowing Nebraskans to view updates on the progress of repairs to state highways and bridges. The website can be found at https://dot.nebraska.gov/news-media/nebraska-flood-2019.
Since my last newsletter, residents and business owners in six additional counties and one tribal area have been included in the disaster declaration making federal funding available to those eligible. The additional counties included Knox County and the Santee Sioux Nation. Boyd County is one of twelve counties still pending. Hopefully, by the time you read this, the decision will have been announced. To apply for individual disaster assistance, call FEMA at 1-800-621-3362 or register online at www.DisasterAssistance.gov. If you have been affected by the flooding and don’t know who to contact in regards to your specific needs, call 2-1-1. They will be able to point you in the right direction. Furthermore, you can contact my office at (402) 471-2801. My email address is email@example.com and my mailing address is District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.