Could the state be without a budget for July, August? Legislative session drawing to a close with worry over votes for an emergency clause
NFIB/Nebraska State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending May 5.
The Legislature is heading into the home stretch as its 2017 session begins to wind down. With the budget bills advanced to Final Reading and comprehensive tax relief rejected, lawmakers have completed most of the heavy lifting for the session and will focus on wrapping up the balance of pending priority bills in the remaining days.
Filibuster Stymies Tax-Reform Package
Comprehensive tax relief appears to be dead for the session, as Legislative Bill 461 fell six votes short of invoking cloture to end a filibuster of the measure. Introduced by Sen. Jim Smith (Papillion), on behalf of Gov. Pete Ricketts, LB 461 would have addressed the following:
- AG LAND VALUATIONS – The state, in 2018, would revise its method for valuing agricultural land for tax purposes, by use of an income capitalization method that reflects the agricultural-use value in the ordinary course of trade. Annual aggregate increases in ag land valuations would be capped at 3.5 percent beginning in 2018. The measure would also ensure that capitalization rates result in aggregate agricultural-use values for any class of agricultural land between 55 percent and 65 percent of the actual value that the land has for agricultural or horticultural purposes.
- TOP INDIVIDUAL INCOME TAX BRACKET – Beginning in 2020, the top individual income tax rate would be incrementally reduced from 6.84 percent to 5.99 percent in eight annual steps, with each reduction only occurring if state revenue growth exceeds 3.5 percent. If the expected rate of growth is not met, the tax rate reduction that would have otherwise occurred will be deferred.
- TOP CORPORATE TAX BRACKET – The top corporate income tax rate would be reduced from 7.81 percent to 7.59 percent beginning in 2019, with the top rate to continue to be reduced for subsequent tax years in increments of 20 percent each year until the top rate reaches 5.99 percent. Reductions would only occur if state revenue growth exceeds 4 percent. If the expected rate of growth is not met, the rate reduction that would otherwise occur is to be deferred.
The motion to invoke cloture failed on the following vote of 27-9:
- Yes (27): Albrecht, Bostelman, Brasch, Brewer, Clements, Craighead, Ebke, Erdman, Friesen, Geist, Halloran, Hilgers, Hilkemann, Hughes, Kolterman, Kuehn, Larson, Lindstrom, Linehan, Lowe, Murante, Riepe, Scheer, Smith, Stinner, Watermeier, and Williams.
- No (9): Bolz, Chambers, Hansen, Howard, Krist, Morfeld, Quick, Schumacher, and Walz.
- Present – Not Voting (13): Baker, Blood, Briese, Crawford, Groene, Harr, Kolowski, McCollister, McDonnell, Pansing Brooks, Vargas, Wayne, and Wishart.
A “yes” vote was in accord with NFIB’s support for LB 461. A “present – not voting” position was essentially a “no” vote on the motion.
Budget Advances to Final Stages of Debate
Lawmakers voted 28-18 to advance the mainline appropriations bill (Legislative Bill 327) to Final Reading. In order to pass with the emergency clause needed to go into effect immediately, the bill will need 33 supporting votes on Final Reading. Otherwise, the budget would not go into effect until three calendar months after lawmakers adjourn for the year. This would leave the state without an effective budget for the months of July and August, likely leaving the state without sufficient funds to operate.
In filing the $55 million budget gap that resulted from revised revenue projection estimates by the Nebraska Economic Forecasting Advisory Board, the Legislature adopted Appropriations Committee recommendations to:
- Temporarily lower the required minimum reserve for the budget from 3 percent to 2.5 percent ($43.35 million);
- Adding base reduction to the Nebraska Game and Parks Commission ($528,000);
- Transfers from the Governor’s Emergency Program Appropriations ($1 million);
- Reducing the General Fund transfers to the Water Sustainability Cash Fund ($1.2 million);
- Reducing the state treasurer’s unclaimed or abandoned property fund ($1.4 million);
- Shifting Veterans Affairs General Fund to cash in federal funds ($3.3 million); and
- Reducing appropriations to a state disability program that provides financial aid and medical assistance to people who have received a disability denial by the Social Security Administration for failure to meet a 12-month duration requirement ($3.4 million).
During the budget debate, Sen. Bob Krist (Omaha) offered an amendment to shift Nebraska’s tax burden in an effort to provide property tax relief. The amendment (AM 1332) to Legislative Bill 332 would have:
- Repealed the New Markets Tax Credit, and the Job Creation & Mainstreet Revitalization/Historic Tax Credit;
- Repealed the resident apportionment of multi-state, pass-through income from S corporations and LLCs, and repealed the exclusion of capital gains on the sale of employee-owned stocks from Nebraska taxable income;
- Enacted some ag land valuation provisions. This would have benefitted only ag land owners by changing how farm and ranch land is valued for tax purposes, tying the assessment to a producer’s income potential from that land; and
- Added $75 million to the state’s Property Tax Credit Program.
Senator Krist ultimately withdrew his amendment but has refiled the amendment on Legislative Bill 233 which may be considered later this session. While supportive of efforts to provide property tax relief, NFIB opposes tax relief delivered in the form of shifting the tax burden from property to sales and income taxes.
Previous Reports and Related News Releases
April 28 Report—Revised State Revenue Projections Force Budget Re-think
April 21 Report—Tax-Relief Measure Likely to Face Filibuster
April 14 Report—Gov. Ricketts, Top Senators Meet With NFIB Members
April 7—Tax Relief Bill Advances to Floor of Nebraska Senate
March 31 Report—Governor Signs NFIB-Backed UI Bill Into Law
March 30 News Release—State Small Business Owners to Convene in Lincoln
March 24 Report—NFIB-Backed UI Reform Bill Passes Nebraska Legislature
March 17 Report—Bill Targeting Unemployment Insurance Abusers Advances
March 10 Report—NFIB Members Rally to Kill Bad Workers’ Comp. Bill
March 3 Report—Senators Given Grim Revenue Forecast
February 24 Report—Nebraska Legislature Designates its Priority Bills
February 17 Report—Legislators Propose Expanding Sales Tax to Sales
February 10 Report—NFIB-Backed Unemployment Bill Advances
February 3 Report—Governor’s Tax Relief Bill Coming Up For First Hearing
January 30 News Release—Comment on Governor’s Press Conference, Today
January 27 Report—NFIB Fighting Habitual Abusers of Unemployment Insurance
January 20 Report—Bill Introduction Period Expires in Nebraska Legislature
January 13 Report—Bill Introductions Less Than Normal in Nebraska Legislature
January 12 News Release—Comment on Today’s State-of-the-State Address
January 6 Report—Nebraska Legislature Opens for Business
[Tile photo of the rotunda floor in the State Capitol courtesy of the Nebraska Unicameral Information Office.]
