NFIB/Nebraska End-of-Session Report

Date: June 20, 2017

Unemployment insurance reform highlights victories for small business

NFIB/Nebraska State Director Bob Hallstrom reports on the small-business agenda after the May 23 end of the 2017 half of the 105th session of the Nebraska Unicameral Legislature.

More than 667 bills were introduced in the 2017 session, with 170 of them enacted into law and provisions of another 39 measures amended into bills receiving final approval. The 90-day session produced many legislative victories for the small-business owner members of NFIB.

Won Unemployment Insurance Reform

Unemployment insurance is a major cost of doing business for Nebraska employers, who in 2015 paid more than $107 million in unemployment insurance taxes, not including federal unemployment taxes. Like workers’ compensation, the unemployment insurance program is fully funded by employers. 

Legislative Bill 203 reforms Nebraska’s unemployment insurance system by bringing it more in line with national standards by implementing requalification provisions. Under LB 203, unemployment insurance applicants who quit their most recent employment without good cause will be ineligible for additional unemployment insurance benefits until they have returned to insured work and have earned at least four times their weekly benefit amount.

Nebraska had been one of only three states that did not require requalification for benefits after individuals voluntarily quit a job without good cause. The bill is expected to save an estimated $3.7 million in 2018 and nearly $5 million in 2019.

Victories by defeat. NFIB stopped the following bills from passing – for now – but all are still alive for consideration in the 2018 half of the current session.

Minimum Wage Increase/Tipped Employees

Legislative Bill 211 would increase the state minimum wage for tipped employees from $2.13 per hour to $3.60 per hour in August of 2017 and then to $4.50 per hour in January of 2018. NFIB expressed opposition to the bill, citing the fact that the minimum wage established under the proposed bill would exceed that which exists under federal law.

Paid Family and Medical Leave Insurance

Legislative Bill 305 would establish a statewide paid family medical leave insurance program similar to Nebraska’s unemployment insurance system and have it administered by the state Department of Labor. The bill also would require employers to pay all other benefits that are due to the employee that would be paid in the absence of leave, as well as all other benefits offered to the employee (vacation, sick leave, etc.) and would require employers to allow employees to return to their jobs after exercising their right to family medical leave.

Ban the Box

Under Legislative Bill 420, employers with 15 or more employees would be prohibited from asking an applicant to disclose, orally or in writing, information concerning the applicant’s criminal record or history, including any inquiries on any employment application, until the employer or employment agency has determined the applicant meets the minimum employment qualifications.

Workers’ Compensation

Legislative Bill 181 proposed changes in Nebraska workers’ compensation law that would have most certainly increased the costs of workers’ compensation claims for small employers. Under the bill’s provisions, if a physician selected by the employer renders medical findings about an employee, and the employee disagrees with those findings, the employee is entitled to a subsequent examination from a physician of his or her own choosing at the expense of the employer. Although the legislation was advanced from the Business and Labor Committee, lack of support when the bill was considered on General File resulted in a motion to “bracket” or delay further consideration of the bill until January 10, 2018.

Many thanks to the NFIB members who responded to the NFIB “Action Alert” by contacting members of the Legislature to express their opposition to the measure.

Sales Tax on Services

NFIB opposed two separate measures that would have imposed a sales tax on a significant number of services that are currently exempt from taxation. Each of these measures (Legislative Bill 312 and Legislative Bill 563) remains stalled in the Revenue Committee.

Tax Relief Falls Short

Unfortunately, tax relief measures supported by NFIB were not adopted this session by the Legislature. Major tax reform proposals were stopped by disputes over whether property taxes or income taxes should be the main focus and over the wisdom of cutting taxes during a budget shortfall. The tax relief proposal (Legislative Bill 461) would have revised the system for valuing agricultural real estate, benefiting rural landowners, and would have reduced the top income and corporate tax brackets. NFIB will continue to support efforts to bring about meaningful property and income tax relief.

Property Tax Credit Fund Remains Intact

While failing to adopt meaningful income and property tax relief, the property tax credit cash fund, which provides $264 million in property tax relief annually, remains intact.

Lawmakers Exercise Fiscal Restraint

The 2017 legislative session began with lawmakers facing a projected $900 million budget shortfall.  With actual receipts falling short of revenue projections, the shortfall ballooned to almost $1.1 billion by the time the Appropriations Committee submitted its preliminary budget recommendations. Lawmakers passed $137 million worth of mid-year budget cuts in February to partially address the budget shortfall. When all was said and done, the Legislature, after failing to override any of Gov. Pete Ricketts’ $56.5 million in line-item vetoes, had adopted an $8.9 billion state budget with spending growth limited to 0.6 percent in the coming biennium.

The final budget:

  • cut some state spending
  • slowed other spending growth
  • tapped cash funds and drew $173 million from the state’s “rainy day” cash reserve fund
  • avoided tax increases
  • fully funded state property tax credits
  • boosted spending on K-12 schools and the troubled Corrections Department
  • paid for a $75 million prison expansion. 

Holding the line on state spending was a top priority of NFIB.

[Tile photo courtesy of the Nebraska Unicameral Legislature]

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