This week will be busy as we begin the second round of debate on LB261 (mainline budget) and LB264 (cash fund transfers). Both bills passed the first round of debate last week, but the budget remains out of balance due to the latest report from the Nebraska State Economic Forecasting Board. At its April meeting, the Forecasting Board reduced the state budget forecast by an additional $190 million for the upcoming biennium.

In the second round of budget debates, we will consider a “white copy” amendment (AM1320) that essentially replaces LB261 with a proposal that includes additional revenue, spending cuts, and cash fund transfers. LB264 will also be replaced by a “white copy” amendment (AM1300). I expect to see many other amendments introduced, especially to AM1320, with alternative ideas for balancing the budget.

This week’s debate will make it clear which state Senators believe in less spending to balance our budget and how committed Senators are to preserving existing tax cuts, both to income and property taxes.

I have made my thoughts on the tax cuts well known. I believe that the income tax cuts need to remain in place if we want to make Nebraska attractive for new businesses to locate here and to keep existing large income taxpayers from leaving Nebraska. Unless you have been living under a rock, it is widely known that our property taxes are out of control and that preserving the property tax credit funds is important to taking some of the cost of K-12 education off the backs of property taxpayers.

I am open to repealing some sales tax exemptions on high-end goods that do not negatively impact low-income individuals and are not business inputs. Examples would be: pool cleaning, chartered jet travel, residential landscaping, and other items along these lines. I am also open to taxing pop and candy, as long as the proceeds are used to balance the budget and provide tax relief. I will remain opposed to more spending that does not directly invest in programs that incentivize more affordable housing and tourism, or provide a proven positive return on investment.

I will also remain opposed to tapping the principal allocated to the Perkins County Canal project. That project is well into the design phase and must be completed if we want to preserve Nebraska’s water rights on the South Platte River.

One thing I have learned during my time in the Legislature is that any funds that can be spent will be spent. That is why sweeping excess cash funds is necessary to both balance the budget and keep needless spending from occurring. I do, however, have concerns that some of the cash funds in the proposed budget took dollars that were already committed to projects underway. I will be working to restore those funds during this process.

It is important to keep in mind that the Appropriations Committee’s budget recommendations tried to take funds that evenly impact all areas of the state, and tried not to negatively impact programs. Because of that, I supported the first-round bills in their original form (as did my conservative colleagues), because if one Senator removed something, there would have been a tidal wave of items proposed to be removed. There is much work occurring behind the scenes to get it right.

In the end, I expect we will need to transfer up to $150 million from the state’s Cash Reserve Fund (rainy day fund) to balance the budget and preserve the tax cuts. This would still leave a healthy balance of over $650 million in the fund. This is well above the average balance and still leaves room for additional transfers in future years if we need it.

It will be an interesting week at the Legislature.

It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

The Legislature was adjourned this past weekend for a much-needed four-day weekend. Although I needed some time in the bank to meet with our outstanding management team, I did take an hour to visit with a group of veterans representing most of the veterans’ groups in the area. They shared with me their legislative priorities and concerns with me. I appreciate their passion and their willingness to take the time to fight for the best interests of all veterans. They deserve our support!

Tuesday will mark Day 73 of the 90-day session. The debate will turn to the budget and how we will produce a balanced budget by Day 80. Our state Constitution requires that we have a balanced budget, and passing a budget is the only thing the Legislature is required to accomplish in the 90-day session. The budget includes a series of bills, but the bulk of the budget is in LB261, introduced by the Speaker at the request of the Governor. The second bill we’ll consider on Tuesday is LB264, also brought by the Speaker at the request of the Governor, which deals with cash fund transfers.

The Executive Board designated both LB261 and LB264 as “Speaker Major Proposals.” Up to five bills may be so designated by a super majority of the executive board. A Speaker Major Proposal allows the Speaker to order the amendments offered on the floor as he sees fit. This means that any priority motions that get in the way of moving the debate forward can be pushed to the end of the debate. Normally, these blocking motions can inhibit getting amendments on the floor and restrict debate to the initial motion. Taking this step is normally done to stay on track to ensure that we get the budget completed by Day 80.

The initial biennium budget was distributed to every member of the Legislature last week, and Appropriations Committee Chair Rob Clements walked us through the highlights on Thursday morning. The budget proposal focused first on finding any cash funds that were excessive and trimming those back. We can agree or disagree on the cuts, but on balance, the cuts made sense. There are three funds that have my attention. One, transfer of future interest accruing on the funds set aside for the Perkins County Canal project. Two, funds transferred from the State Visitors Promotion Fund. This fund was scheduled to have $4 million transferred, but the final proposal was reduced to $1 million in each of the two upcoming fiscal years. Three, the Youth Outdoor Recreation Fund (replacement money for the former 4-H camp). The proposal is to leave $3 million of the $10 million in the fund to have it adequately funded during the coming biennium, but the State remains on the hook for the remaining $7 million as the matching funds are collected.

I will leave you with one observation regarding the state’s fiscal situation. We left the special session last summer with $56.9 million above the minimum reserves. In the interim, the forecasting board lowered its forecast for future revenue, which initially put the budget in a projected $489 million shortfall. Meanwhile, there have been several new losses of revenue brought on by reductions in federal funding. This was primarily seen in the form of Federal Medicare Assistance Percentage (FMAP), which allocates funding based on the economic performance of each state. The better a state performs economically, the more money it loses (up to 50% of all funding).

I also want to remind everyone that the state’s Cash Reserve (rainy day fund) currently stands at $821 million (14% of expenses). This compares to a rainy day fund of $333 million in FY2019-20 (9.2% of expenses). The state is far from broke and has room to navigate through this environment.

I am looking forward to a lively debate on the budget and am certain that the Legislature will be able to find a path forward to a balanced budget.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.

Monday, April 28, will mark Day 69 of the 90-day session. However, last Friday, the Nebraska Forecasting Board released its last report before the Legislature discusses the budget. As expected, the Board once again lowered the state’s revenue forecast, estimating a decline by another $190 million over the next biennium. This further widens the state’s forecasted budget deficit to $341 million.

Some of the bills discussed and advanced last week will start to close that gap, if passed. LB650 generates over $55 million by reducing or eliminating recently passed tax credit programs and tax exemptions. Another $80 million would come from reducing the state, teacher, and school contributions to the teacher retirement fund; the plan is 99.9% funded, well above the 80% minimum. This will not only save the state money, but will also result in more take-home pay for public school teachers.

In addition, the Appropriations Committee’s proposed budget will take a total of $145 million in principal from various cash funds and $19 million of investment earnings from other cash funds. The committee’s preliminary budget also calls for millions of dollars in cuts from state agencies.

I can hear the shouts from the progressives in the body that the budget shortfall is due to recent tax cuts, which include lowering the state’s income tax rate and eliminating the state tax on Social Security benefits. There will be further calls to claw back the funding to build the Perkins County Canal and the funding to build the new state prison. However, there will be no mention of the $1 billion used to fund the Education Future Fund to provide more funds to public education funding and, of course, the millions of dollars to further develop North Omaha.

Even with the reduced revenue projection from Friday’s forecast, the state is projected to bring in $6.95 billion in net revenue next year. This is the highest amount of revenue since the fiscal year 2023-24, when state revenues totaled $7.15 billion. This was the year following the federal PPP loans and other federal transfer payments dealing with the pandemic. As a result, state income tax revenues soared.

It is always important to remember that spending plays a large role in the budget shortfall, and the reduction in federal Medicaid payments of $90.3 million impacts this year’s budget.

I remain confident that further cuts in spending, coupled with selected sales tax exemption repeals or increases, will allow us to find the funds necessary to balance the budget. The sales taxes that are proposed to go on the tax rolls include items that will not impact the poor and will not be taxes on business (and ag) inputs.

I am committed to keeping our tax relief measures in place and will defend them on the floor. We have a spending problem and cannot give up the progress we have made in reducing our state’s tax burden. The sales taxes we are proposing would be on items that are not necessities and are wants, not needs.

I look forward to continuing to hear from you about issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

Last Friday was Day 64 of the Nebraska Legislature. We will begin late-night sessions on Tuesday with a one-hour lunch breaks, since the Appropriations Committee will no longer meet over the lunch break. On our first late night, we will go until 7:00 p.m. with no dinner break. But, the length of late night debate will vary depending on bills scheduled that day and can go as late as 11:59 p.m.

This Friday, April 25, will be a significant day, because the Revenue Forecasting Board will meet that day. It will be their final meeting prior to the end of the regular session, and our budget will be based on these numbers. The Appropriations Committee has until Day 70 (April 29) to advance its budget proposal to the full legislature, and it must be approved by Day 80 of the 90-Day session. This means that the time to debate other non-budget bills is growing short, even with the longer days.

Anyone listening to the session on TV has witnessed some outlandish claims by those filibustering bills on the floor. The general theme is that the budget is out of balance due to Governor Pillen overspending and on tax breaks for the wealthy. The fact is, it is the Legislature that passes spending bills, not the Governor. And it’s important to remember the decisions of recent legislatures, and outside factors, that influence where we are today.

I was first appointed to the Legislature in February 2022 during the second half of the 107th Legislature. At that time, the pandemic was ending, and massive amounts of federal money had been infused into the economy. This infusion of dollars caused tax revenues to surge as businesses and individuals either paid more in income taxes and sales taxes, or both. The additional state income tax revenues were used to begin the elimination of the State tax on Social Security and the phase down of the highest income tax rate to 3.99% from the nearly 7% at the time. This change was necessary to make Nebraska more competitive in attracting businesses to Nebraska. Our neighboring states had more competitive tax rates, with South Dakota and Wyoming having no income tax at all. This was one of then-Governor Ricketts’ signature accomplishments as he ended his time as Governor.

It should also be remembered that the state budget surplus has exceeded the statutory limit in recent years, which required legislators to spend down the surplus. It was for that reason that several “one-time” spending measures were taken.

Around this same timeframe, the American Rescue Plan Act (ARPA) dollars were flowing as well. These dollars were targeted dollars for infrastructure projects and could not be used for tax reductions. I remember securing $20 million in ARPA money for the Sustainable Beef project to be used for the sewage treatment project. This was one of the permissible uses for ARPA funding.

Then came 2023, the year of the filibuster. This was the year when Senator Machaela Cavanaugh pledged to “burn down the session” if Senator Kauth did not withdraw her priority bill, LB574. As a result, she led a filibuster on every bill heard on the floor, including confirmations. As a result, committee amendments, which typically include provisions from multiple bills heard by the committee, grew to ensure work was still being done. One bill had over 23 separate bills included in one amendment. Many bills slipped through the process as Senators were tired, and the bills were so massive, it was hard to know what was in them in the amount of time we had to review. Some of the work we’re doing now is to undo legislation passed in 2023.

Part of our financial commitment is also the state’s increased support of education funding. When certain Senators accuse the Governor of crazy spending on tax breaks for the wealthy, they fail to mention the Education Future Fund, which called for $1 billion in education support. Stronger state funding for public education improves certainty for schools’ budgeting and decreases the educational portion of local property taxes. Lower property taxes benefit all Nebraskans.

Now, as we turn to the 109th Legislature, the Revenue Forecasting Board delivered a massive reduction in the revenue forecast that took away significant funding on which the budget was based in 2023-24. The work we are doing today is to make up that revenue shortfall with spending cuts and some replacement revenue. Keep this in mind as you listen to the debate over the budget. You will see a push on one side to repeal the income tax reductions and the property tax credits, and you will witness a strong defense of these tax reductions on the other. Let’s not forget how we got here.

I look forward to continuing to hear from you about issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

This past Friday marked Day 60 of the first session of the 109^th Legislature. The last of the non-priority bills are finishing their way through the process, and attention has largely turned to priority bills. However, the Speaker did announce this week that he also plans to hold one or two consent calendars.

Under the rules and the Speaker’s guidelines, Senators can request a non-priority bill be considered for a consent calendar bill if it is non-controversial, has no fiscal note, was advanced out of committee, and if any opposition at the bill hearing is resolved by the committee amendment. Generally, bills that are entirely new laws will not be included on a consent calendar. If your bill is selected for a consent calendar, it will be allowed up to 15 minutes of floor debate and cannot be amended beyond any committee amendment. This is a way to pass simple bills. Since the bills I sponsored are moving on their own, I will not be submitting a bill for consideration for a consent calendar.

As we move closer to Day 70, attention will turn to passing a two-year budget. In the meantime, several revenue-generating bills will be considered to help balance the budget. Although the number continues to evolve, Nebraska is facing a sizable budget deficit. We are getting to a balance through cuts to state spending in the Appropriations Committee and several bills for new revenues. Among those bills is LB527, my bill to draw down more federal Medicaid dollars for healthcare providers in Nebraska. Original estimates project that Nebraska would receive $117 million in the first budget cycle from LB527.

Last week, we debated LB650 as amended by AM923. LB650 was introduced by Senator von Gillern on behalf of the Governor and primarily repeals certain business incentives passed over the past two years. It also reduces funding to certain underutilized programs. In the end, this bill is a straightforward measure that makes changes we lived without prior to the original provisions’ passage. This bill is estimated to bring $71 million in additional revenue or savings during the budget period.

I consider most of the savings in LB650 as “low-hanging fruit,” but the rhetoric in the bill’s debate was much more dramatic. The next bills coming up for debate will include LB169 and LB170 introduced by Senator Brandt. These bills were amended in committee, but repeal several sales tax exemptions or add sales taxes to certain items not yet on the sales tax rolls. The items included on the list primarily focus on non-business inputs and not essential items, but anyone who has a dog in this fight is strongly opposed.

LB170 primarily focused on repealing the sales tax exemption on soft drinks in a bottle or can. Believe it or not, pop in a bottle or can is not subject to sales tax today, but if you buy it from a fountain where it is dispensed into a cup with ice, sales tax is charged today. These bills are sure to go through many changes before getting past the finish line. You can expect strong push back from many saying that we are increasing taxes. The fact is, we are balancing the budget without reducing the State’s commitment to property relief.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.

The Speaker announced this week that he intends to keep bills moving that have made it to Select File, but will only schedule priority bills for General File debate. He has also cautioned that there is a good possibility that some priority bills will not be scheduled for debate due to time constraints. He may also choose not to reschedule bills that were filibustered on General File and are likely to be filibustered going forward. With that said, he may require Senators whose bill struggled on General File to show a vote card ensuring the votes are there to keep the bill moving. The Speaker wants to hear as many priority bills as possible.

During my time at the Legislature, I have seen many bills that were intended to improve the lives of Nebraskans. Unfortunately, many such bills create unintended consequences. Bills intended to reduce property taxes are among those bills. Our state Constitution mandates that land in Nebraska be taxed “uniformly and proportionately” with the exception of land designated as “agricultural and horticultural.” It may be valued as a separate and distinct class of land and shall be valued at less than full market value. 

Valuing land using this method is known as the “uniformity” clause in the Constitution and ensures that all classes of real estate are valued consistently based on comparable sales for each type of real estate. It is not perfect, but it requires certain classes of real estate (other than ag) to be valued at 100% of fair market value. 

So why is ag valued differently? The answer is that the value of ag land does not track with returns from all other classes of real estate due to the influence of outside investors. Today, many buyers of agricultural land buy the land because it is a “hard” asset that is also a hedge against inflation. 

At one time, agricultural land values tracked closely with the return on the land. For example, a quarter section of land in Clay County in 2018 would sell for approximately $8,000/acre and could be cash rented for up to $400/acre. Since that time, the value of the same land has risen to $14,000/acre, and the cash rent has actually fallen or remained the same at approximately $375/acre. Using $75/acre taxes and a cash rent of $350 equates to 21.4% property taxes of the income and reduces the income to $275/acre or a net return on investment of 1.964%. No other class of real estate is taxed at that level. This example uses a valuation of 75% of the actual fair market value. Meanwhile, other classes of real estate tend to have real estate taxes in the range of 10% of actual income, moving in concert with values.

LR12CA is Senator Kauth’s priority bill. It is a proposed Constitutional amendment to change the uniformity clause and eliminate the ag value exception. After visiting with her, the ag exception was restored, but the problem with the original text of the bill was to limit taxation of each class of real estate to 1.5% of full market value. The problem, of course, with this clause is that ag land could see a $14,000 farm taxed at up to as high as $210/acre with a cash rent income of $375.00.

The one redeeming quality of the bill was to limit annual increases in value up to the consumer price index (CPI) or 3%. There would be carve-outs if the property is sold under certain circumstances. In the end, if the bill moves forward, it will do so with only this change to the Constitution.

The original intent of the bill was very good, but the unintended consequences would have been very harmful to agriculture and come at a time when agriculture is least able to afford this cost. I appreciate Senator Kauth’s willingness to modify the bill before moving it forward.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.

Now that committee hearings have ended, all-day floor debate begins. It is likely that several bills will be filibustered, but all-day floor debate will allow General File filibusters to take place in just over one day as opposed to taking nearly a full week. But still, there are several bills yet to be heard, including my priority bill, LB526.

I was honored to join our federal delegation in speaking this past Monday at the grand opening of Sustainable Beef. This project, like most large projects, took years to plan and bring to this point. Many people were involved in making this project come to pass. Clearly, the organizers and investors played a huge role, but the city, planning and zoning board, community redevelopment association, and state also played a role in getting the proper approvals and assisting with the project. But in the end, the organizers took a huge risk to make all this possible, and we all should be grateful. These opportunities don’t come along every day.

This project will have a huge impact on the entire region once it opens. The 850 plus jobs directly related to the project will be just the beginning. This project will not only positively impact the price of locally sourced cattle but will also have a positive impact on cow/calf producers. When more families locate here to fill the jobs created, they need a place to live, their children attend our schools, and all our retailers grow their sales. Growing the base also brings more retail, more housing, and all the amenities you find in urban areas while preserving the benefits of rural life. All this activity increases our property tax base and sales tax base, spreading the tax load over a broader base. It also grows the state’s economy, increasing the income tax base.

I have often said that economic development projects usually begin by having a competitive advantage over other locations. This project is a great example of utilizing built-in synergies. North Platte is at the nexus of access to cattle, an interstate and highway, and access to distribution infrastructure, which made it an ideal location for Sustainable Beef.

The same holds true when locating feedyards in west-central Nebraska. The primary reason for locating here is the climate. Because we have lower humidity, winter cold weather feels less cold, and the summer heat is less intense. The lighter soil reduces muddy conditions in late spring. The relatively less concentrated rural population base allows for greater distance between feedyards and their closest neighbors, reducing the risk of odors causing issues. And again, the interstate and nearby packing plants make this area a great place for area cow/calf producers to place quality feeder cattle in area feedyards and ultimately into this plant.

Special thanks to Gary Person, President and CEO of the North Platte Area Chamber and Development Corporation, and Brandon Kelliher, Mayor of North Platte, who helped the organizers navigate the process and get this project to the finish line.

Like the organizers said, Sustainable Beef was possible because of the right people being in the right place at the right time.

I look forward to continuing to hear from you about issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

As committee hearings come to an end, the Legislature will move to all-day floor debate after this week. The first half of the legislative session has proven to be fairly productive if you measure the session by number of bills passed and progress of bills advanced from committee. Through 48 legislative days, 49 bills have been approved by the Governor, and 22 bills are on Final Reading. However, it is likely that the pace of the Legislature is likely to slow as we experience more filibusters given the number of controversial bills that are yet to be scheduled for floor debate.

The Speaker has committed to continue moving forward non-priority bills that are on Select File. If a bill has not passed General File debate, it is very unlikely that it will be heard unless it was prioritized or gets attached to a bill that is moving forward. I am fortunate that five of my bills have been signed by the Governor, two are on Final Reading, two are on Select File, and two are on their way to Select File.

My priority bill, LB526, relates to cryptocurrency mining and was forwarded out of the Revenue Committee with my amendment late last week. As amended, the bill will not impose any new tax, but instead remain focused on limiting excessive consumption of electricity by large crypto miners who consume large amounts of electricity while producing very little new tax base and only a few jobs.

Today, there are several large employers who would locate a facility in Nebraska, create quality jobs, and broaden our tax base. Unfortunately, if they need more than 5 megawatts of power, they will need to get on a years-long waiting list if they need a continuous power supply. I brought LB526 to limit the consumption of electrical power by very large users who do not produce commensurate amounts of quality jobs, property taxes, income taxes, and sales taxes.

The reason I targeted cryptocurrency miners is because they are the classic consumers of very large electricity loads with only a few quality jobs and tax generation. As an example, the crypto mining facility in Kearney consumes more power than the entire City of Kearney does on an annual basis. The owner is located in Florida and there are fewer than five full-time local jobs today. They do pay sales tax on electricity consumption, including the local option sales tax Kearney, but most miners stay outside cities to avoid paying local sales tax.

Lincoln and Omaha have more level energy loads on an annual basis. Meanwhile, the rural public power districts have heavy electricity loads during irrigation season, but fall off significantly in the off-season. For that reason, the bill was amended to allow for rural power districts to accommodate crypto miners as long as they agree to be interrupted during peak load season or any time the demand is high. This allows rural power districts to sell excess power when it is available to help hold power costs down.

Our state needs a strategic plan that we all can get behind to make the best use of our state’s resources and use our built-in competitive advantages to grow the ENTIRE state. We also need to ensure public power is making the necessary investments to support economic development. One of the best ways to lower our tax burden is to take thoughtful steps to accomplish the growth we need. This will also clarify where our future investments need to be directed.

It is a privilege to represent you in the Nebraska Legislature, and I look forward to hearing from you regarding issues that are important to you. I can be reached at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.

All committee and individual priority bills were due last Friday and requests for Speaker priority bills were due last Thursday. The Speaker will announce his selections for Speaker priority bills on Monday. Going forward, the Speaker will begin scheduling priority bills to be heard on General File and will continue to schedule bills that have already moved to either Select File and Final Reading. At this point I have gotten 5 bills passed, one bill is on Final Reading, and three bills have been advanced from General File and are heading to Select File (including the “A” bill for LB527).

Two bills that I introduced are stuck in committee. One of those bills is LB37 The Railroad Safety Act. We knew that this bill was aggressive, but each train derailment and controllable accident makes our case stronger. Like the “two-person crew” bill last year, no one gave it a chance of passage, yet we got it out of committee and had over 25 votes for advancement. Unfortunately, we did not have the 33 votes for passage. This year, the railroad companies asked for an Attorney General opinion on the bill that suggested that several parts of the bill would have possible Constitutional issues. As a result, LB37 was not voted out of committee this session. We will be back next year with an amended bill.

Despite not being able to move LB37 this session, I think it’s still an important bill. Much of the railroads’ activities are regulated at the federal level. But just because some state action is preempted, it doesn’t mean there is no value in proposing a state solution. I am convinced that states taking action to pursue “two-person crew” was part of why the Federal Railroad Administration finally decided to act. I hope bills like LB37 will push the FRA to require more safety measures to be put in place.

There are several pending bills that will impact our area of the state. They include Daylight Saving Time legislation, one related to the brand area, and ongoing tax bills. One thing has become very clear to me over my time in the Legislature, the Senators representing the two largest cities in the state have no interest in paying for the cost of local government in rural Nebraska. This is one of the primary reasons I have opposed the EPIC tax; if all tax collections go to the Lincoln, we will never get back our share. That is crystal clear to me.

It is also clear to me that when people suggest that the tax cuts are unsustainable, I respond by saying it is the spending that is unsustainable. This year alone, we have heard bills that provide more and more free services or more state subsidies. Any money that the state leaves laying around will get spent if it is not in a segregated reserve account or already allocated.

Last week, we considered removing certain sales tax exemptions to raise additional revenue to balance the budget and provide property tax relief. Immediately following the hearing on removing some tax exemptions on sales taxes that will not impact “needs” of low-income residents and not raise taxes on business inputs, a bill was heard to provide a Homestead Exemption to first-time home buyers. One committee member suggested that the revenue produced from the additional sales tax revenue could pay for the new Homestead Exemption. I rest my case on the spending problem in Lincoln.

I am a firm believer that there must be some kind of tax shift if we are serious about property tax relief. Today, an annual tax shift occurs when expenses outpace revenue. That shift is in the form of additional property tax asks. We know that we will need nearly $300 million in state aid to political subdivisions to keep property taxes flat. We cannot stand by and let this continue. As a result, we must find a way to generate more revenue and cut spending at all levels of government. I like sales taxes because it is a voluntary tax if we do not include necessities and business inputs. Thousands of travelers drive through the state daily. If we can collect sales taxes from those travelers (like other states do) or generate funds from non-necessary goods and services, we can generate additional revenue without harming low-income families and negatively impacting businesses.

I look forward to continuing to hear from you about issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.

This will be an important week in the Nebraska Legislature since individual and committee priority bill designations are due this Friday. The Speaker will announce his priority bill designations next Monday. Now that there are many bills for the Speaker to schedule for General File debate, it will be much harder to get a bill scheduled that does not have a priority designation. Each Senator can prioritize one bill and each committee can prioritize two bills. The Speaker can designate up to 25 bills. The Speaker’s priority bills are selected from a list of requests submitted to the Speaker by individual Senators.

Last week, we received an update on the budget and where we stood at this point. Unfortunately, we continue to receive bad news regarding federal funding cuts for programs that are mandated for states to administer. As a result, many of us believe that any bills with fiscal notes (funding needs) will likely need to be held and not be approved this year.

It is important to remember how we fund government in Nebraska. Political subdivisions (counties, cities, school districts, etc.) are the only entities allowed to collect property taxes. The state collects income taxes and sales taxes as their primary income sources. Various state agencies also collect fees for services. Counties also collect fees for various services and collect inheritance taxes. Cities also collect fees and “local option” sales taxes to enhance their revenues. School districts receive funds in the form of state and federal aid, but local property taxes provide a huge portion of their funding needs.

Like any entity that employs people, the state and its various political subdivisions also experience the increasing costs of doing business that others face. Government is feeling inflationary pressures, plus the increased costs of providing health insurance and other benefits. Health insurance costs alone are climbing at double-digit rates due in large part to additional insurance mandates and the rising cost of pharmaceuticals.

As a result of our current economic climate, the average annual increase in tax asks by political subdivisions throughout the state is increasing at a rate of approximately $275 million annually. Therefore, the state would need to increase aid to political subdivisions by this amount every year to keep our property taxes flat. The state currently dedicates over $1 billion in direct property tax credits each year and would need to increase those commitments by $275 million annually to offset the rising cost of funding political subdivisions.

I continue to read about ongoing frustrations that the Legislature is ignoring the property tax crisis and that we need a new tax system to fix the problem. The fact remains that no matter how we collect our tax revenue, the cost to support all levels of government continues to climb. There are two ways to fix this problem: reduce spending, increase revenues, or a combination of both. Increasing revenue can come by increasing existing tax rates, expanding the forms of taxation, or growing our state so the tax burden is spread over more taxpayers. The Legislature is focused on spending cuts, diversifying tax revenues, and growing the state.

As a member of the Revenue Committee, I have been shocked to see the number of bills that were heard this year that would increase spending or reduce tax revenues by giving tax credits. I would estimate that the cost to the state if all these bills were approved is over $1.5 billion. I will continue to oppose these bills unless the sponsor can demonstrate a rate of return on investment that outstrips the ask in the bill.

I will be joining a small group of lawmakers on Tuesday to discuss the budget with the Governor and map out the path forward this year. We will also get an update on efforts the Governor’s office has made to substantially reduce state spending by reducing waste and duplication. A company called Epiphany was hired two years ago to do a comprehensive review of state spending. They have found many savings to slow state spending growth. The same must be done at the local level to find ways to reduce property tax needs directly.

I still have not made a final decision on my personal priority bill, but will this week.

I look forward to continuing to hear from you about issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.