Neutralizing effects of federal tax reform aims to stop increases
State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending March 9
The Legislature adjourned for the weekend March 9, having completed two-thirds of the short, 60-day legislative session. When lawmakers return next week, they will begin deliberations on the budget March 13. The Appropriations Committee has recommended an $8.8 billion state budget that increases spending by only a half-percent for the remainder of this fiscal year and next. With the budget adjustment, $298 million will be left in the state’s rainy-day fund at the end of 2019.
Floor Action
The Legislature took affirmative action this week in an effort to avoid a tax increase for most Nebraska taxpayers.
Legislative Bill 1090 – Income Taxation: The Legislature has given first-round approval to LB 1090, which was introduced by Sen. Jim Smith (Papillion) and designated as a priority bill by the Revenue Committee. LB 1090 would make adjustments to state tax laws in order to neutralize effects resulting from federal tax reform. The measure would:
- retain the personal exemption credit against Nebraska income taxes
- increase the Nebraska standard deduction
- continue indexing the standard deduction, personal exemption, and tax brackets based on the Consumer Price Index.
It is estimated that an additional $227 million will flow into the state’s coffers as a result of federal tax reform. The cash windfall results from elimination of personal and dependency exemptions for federal tax purposes, along with other changes in the federal tax code to which Nebraska’s tax system is connected. LB 1090 will allow Nebraska taxpayers to retain these funds.
Prior to advancing LB 1090 to Select File, the Legislature rejected an amendment proposed by Sen. Bob Krist (Omaha) that would have limited the reinstated personal exemption to individuals with income of less than $100,000 ($200,000 for married filing jointly). The amendment, which was estimated to result in an effective $66 million tax increase for high-income Nebraskans, was defeated on the following vote of 12-24:
Ayes: Senators Baker, Bolz, Crawford, Hansen, Howard, Kolowski, Krist, Morfeld, Pansing Brooks, Quick, Walz, and Wayne.
Nays: Senators Albrecht, Brasch, Brewer, Clements, Friesen, Geist, Groene, Halloran, Hilgers, Hughes, Kolterman, Lindstrom, Linehan, Howe, Murante, Riepe, Scheer, Schumacher, Smith, Stinner, Thibodeau, Watermeier, Williams, and Wishart.
Present – Not Voting: Senators Blood, Briese, Chambers, Erdman, Harr, Hilkemann, McCollister, and McDonnell
Excused – Not Voting: Senators Bostelman, Ebke, Kuehn, Larson, and Vargas
Small Business Day at the Capitol
NFIB/Nebraska will co-sponsor a Small Business Day at the Capitol, March 13, in Lincoln.
NFIB’s co-sponsors are the Nebraska Chamber of Commerce and Industry, the Greater Omaha Chamber of Commerce, the Lincoln Chamber of Commerce, the Lincoln Independent Business Association and Nebraskans For Workers’ Compensation Equity and Fairness.
Small Business Day gives NFIB members an opportunity to network with other small business owners. Gov. Pete Ricketts is expected to speak, and there will be a legislative briefing by state senators.
Click here for more information and to register
Previous Reports and News Releases
March 2 Report—NFIB Rallying Troops for Support of Workers’ Compensation Bill
February 23 Report—Three NFIB-Backed Workers’ Compensation Bills Advance
February 16 Report—NFIB Working on Data Breach, Credit Reporting Bill
February 9 Report—Senator Seeks to Reverse Legislature’s Call for Constitutional Convention
February 2 Report—Session a Third Complete, Tax Reform Still on Front Burner
January 26 Report—Floor Debate Coming up on Minimum Wage, Ban the Box
January 19 Report—Deadline for Bill Introduction Passes in Lincoln
January 17 Guest Editorial—Nebraska Congressional Delegation Thanked
January 12 Report—NFIB Scores Victory in First Week of Session
January 12 News Release—Comment on Gov. Ricketts’ State-of-the-State Speech
January 5 Report—Nebraska Legislature Opens for 2018 Business
Tile photo courtesy of Unicameral Update, “The Nebraska Legislature’s official news source since 1977.”
