Tuesday was a long day spent discussing four bills. We began the day with the second round of debate for LB873, which now contains four critical tax cuts for Nebraska families. First, LB873 accelerates the phase-out of Nebraska’s social security income tax from 10 years to 5 years. This is a huge win for our seniors on fixed incomes.
Second, the bill lowers certain personal and corporate income tax rates to 5.84%, down from the current rate of 6.84%.
Third, LB873 incorporates modifications to the refundable income tax credit in LB1107, the historic property tax relief package passed in 2020, needed due to strong revenues coming into the State. In 2021, this income tax credit will be equal to 25% of the amount of school district-related property tax paid. LB873 allows the credit to continue to grow at a reasonable rate over the next several years.
Finally, LB873 creates a new refundable income tax credit for community college-related property taxes paid, similar to the LB1107 provisions for local public-school taxes.
All told, this entire tax package is expected to amount to $900 million annually by Fiscal Year 2027-2028. This is real tax savings for hard-working Nebraska families!
Next, we considered a veto override for LB1073, a bill to compel the Governor to accept the remaining federal dollars available to Nebraska for rental assistance. The motion to override fell one vote short of passage.
We then moved on to debate LR264CA, which proposes to place a constitutional amendment on the ballot to eliminate property, income, and corporate (“EPIC”) taxes in favor of a consumption tax. This new tax would be charged on all new goods and service purchases that are not business inputs, including food, medical services, prescriptions, new vehicles, new homes, interest on loans and savings accounts, etc. Although there would be a carve-out for certain business expenses and would include a so-called “prebate” to help offset new taxes on the poor, the consumption tax is largely untested and would be a radical change from the tax system used in the U.S.
The consumption tax is an intriguing concept, and I remain open to new ways to reduce property taxes. However, there seem to be many questions yet to be answered, including what checks and balances will be in place to ensure necessary funding for rural communities and public services such as schools, first responders, courthouses, and infrastructure. Local control is important to Nebraskans and the EPIC consumption tax would place all of the funding power with a single state taxing authority. In the end, I was not able to get acceptable answers to my questions. We need to see the entire process before deciding whether these radical changes are right for Nebraska.
After several hours of debate, LR264CA obtained only 19 of the 25 votes necessary to advance the bill to the next round.
The rest of the day was spent listening to more debate on LB920, the criminal justice system reform bill, which will come to a vote Wednesday morning. I remain opposed to this bill without the elimination of certain provisions that I believe pose a risk to public safety.
After voting on LB920, we will move on to an important debate on LB933, the Human Life Protection Bill. The bill is certain to be filibustered, and I hope the Unicameral will use this debate time to iron out some important details of the bill so we can gain the votes necessary to pass this important pro-life legislation.
It should also be noted that the Governor returned vetoes on Tuesday for a few line items in the budget. Of note, to reduce the provider rate increase for health care providers from the proposed 15% increase down to the original 8% increase. In my mind, this is unacceptable. I will be voting, with what I think will be the majority, to override the veto and restore funding.
As always, my door is open to constituents, and I would love to hear from you at email@example.com or 402-471-2729. It is an honor to represent you and District 42 at the Nebraska Legislature.