Nebraska lawmakers must now do with $55 million less
NFIB/Nebraska State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending April 28.
With just 15 working days remaining in the 2017 legislative session, lawmakers have considered the vast majority of “priority bills” but face significant issues as they work to balance the budget and consider comprehensive tax relief.
When the Legislature reconvenes May 2, first-round debate on a tax-relief proposal (Legislative Bill 461) will continue and second-round debate on the budget will be conducted.
State Budget
The Legislature spent the better part of two days debating a series of budget bills. Intense debate centered on an amendment to reduce proposed transfers of $15 million from the Highway Cash Fund in each of the next two years to $7.5 million each year.
The amendment was ultimately rejected by a vote of 20-27. Prior to advancing the budget package to Select File, after invoking a “cloture” motion, lawmakers engaged in a contentious debate on a provision of Legislative Bill 327 that would give priority to certain types of health clinics to receive Nebraska’s annual share of federal Title X funds. Efforts to remove these provisions from the bill were defeated on a vote of 17-19, but the issue will certainly be debated when the budget package is next considered.
Balancing the budget became a tougher task when the Nebraska Economic Forecasting Advisory Board April 26 lowered projections for state revenues by $55 million, $15 million less this year, $20 million less in 2017-18, and $20 million in 2018-19. The Appropriations Committee is expected to go back to the drawing board to determine how to make up the projected shortfall.
Debate also stalled on a companion revenue bill (Legislative Bill 233), designed to bring more revenue into the budget. The bill would suspend an Angel Investment Tax Credit for one year, saving the state $4 million, and suspend a personal property tax exemption worth $15 million in each of the next two years. Based on concerns regarding the suspension of the personal property tax exemption, the bill was placed on hold and no action was taken.
Tax Relief
When the Legislature reconvenes May 2, it will continue first-round debate of a comprehensive tax-relief package (Legislative Bill 461). The measure contains provisions changing the manner in which agricultural land is valued for tax purposes and reduces individual income taxes and corporate taxes over time.
LB 461, as amended, would address 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.
A series of amendments of interest to NFIB have been filed, including the following:
- AM 1115. Introduced by Sen. Tom Briese (Albion), AM 1115 to LB 461 would expand the sales tax to a significant number of services. (NFIB Position – Oppose)
- AM 1188. Senator Jim Smith (Papillion) is the sponsor of AM 1188 to LB 461, which would provide for the transfer of an additional $20 million to the Property Tax Credit Cash Fund beginning November 2019, if the expected rate of growth in net General Fund receipts exceeds 4.51 percent for the upcoming fiscal year. (NFIB Position – Support)
Previous Reports and Related News Releases
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 Sen. Patty Pansing-Brooks courtesy of the Nebraska Unicameral Legislature website.]
