End of 2018 Session Report on Nebraska Legislature

Workers' compensation reform, defeat of tax increases highlight NFIB accomplishments for small business

Lawmakers began the 2018 legislative session on January 3 facing a budget shortfall of almost $200 million. In meeting its constitutional obligation to present a balanced budget to the governor, the Legislature imposed reductions in funding for state agencies, the University of Nebraska, and state colleges, while maintaining existing funding levels for K-12 education the Nebraska Department of Correctional Services, and preserving full funding for the Property Tax Credit Cash Fund, which annually provides approximately $224 million in property tax relief to residential, commercial, and agricultural landowners. Lawmakers adjourned the 105th Nebraska Legislature April 18.

Victories for Small Business

Won Workers’ Compensation Reforms
NFIB successfully lobbied for the passage of Legislative Bill 953, which will reduce the cost of the workers’ compensation system for employers by removing significant impediments to the settlement of claims.

Introduced by Sen. Joni Albrecht (Thurston), LB 953 will address issues relating to the approval of lump-sum settlements by the Workers’ Compensation Court. The measure will establish a conclusive presumption that a lump-sum settlement is made in conformity with the compensation schedule and for the best interests of the employee or his or her dependents under all of the circumstances, if the employee’s attorney elects to affirm these facts in the application for an order approving the settlement.

The conclusive presumption will apply to cases in which (a) the employee is eligible for Medicare, is a Medicare beneficiary, or has a reasonable expectation of becoming eligible for Medicare within 30 months of executing the settlement; or (b) medical, surgical, or hospital services provided to the employee are not paid by the employer, or any person other than Medicaid, who has made any payment to the supplier of medical, surgical, or hospital services provided to the employee, is not reimbursed by the employer.

Electronic payment of workers’ compensation benefits was another NFIB victory. Introduced by Sen. John Lowe (Kearney), Legislative Bill 957 will authorize, upon written or electronic agreement of an employer or insurer and an employee entitled to compensation under the Workers’ Compensation Act, payments to be made by electronic means (direct deposit, prepaid card, or similar electronic payment system).

Defeated Tax Increases
With lobbying support from NFIB, the Legislature passed three measures designed to shelter residents/individuals from state tax increases triggered by inflation and the new federal Tax Cuts and Jobs Act.

Legislative Bill 1090 will prevent changes made by the 2017 federal Tax Cuts and Jobs Act from triggering automatic tax increases in Nebraska, saving individual residents approximately $226 million, collectively. The measure restores the personal exemption credit that was effectively repealed by the Tax Cuts and Jobs Act, increases Nebraska’s standard deduction for individual taxpayers, and maintains the current method of indexing individual income tax brackets for inflation, rather than the method adopted under the new federal tax law which grows more slowly. Individuals will save $134 for each personal exemption claimed on their tax return due to the reinstatement of personal exemptions under state tax law.

Legislative Bill 1089 will restore the state’s personal property tax exemption for purchases of agricultural and business equipment when using trade-ins. The exemption had been eliminated by the 2017 federal tax bill. LB 1089 will prevent valuation increases on personal property that would otherwise be subject to taxation at the local level.

Legislative Bill 738 will adjust the state’s social security income tax exemptions automatically to keep pace with inflation, starting in 2020, which will protect the purchasing power of retirees.

Stopped Costly Tax Shifts
NFIB helped beat back Legislative Bill 1084, a significant tax shift that would have raised sales and income taxes while spending more on K-12 education aid and increasing the Property Tax Credit Cash fund. Among other things, the bill would have increased the state sales tax rate; removed several sales tax exemptions; imposed sales tax on new products and services; repealed the $10,000 personal property tax exemption; levied an income surtax on high earners; imposed a state alternative minimum tax; and repealed an adjustment allowing individuals to decrease their adjusted gross income for non-Nebraska income earned through a pass-through entity.

Another measure NFIB worked to defeat was Legislative Bill 829, a proposal designed to reduce local property taxes. Under LB829, property owners would have received refundable income tax credits from the state equal to half the school district taxes levied on their property. Those without enough income tax liability would have received a direct payment from the state. The bill would have cost the state an estimated $1.1 billion annually, without identifying budget cuts or tax increases to provide funding for property tax relief.

Derailed Costly Labor Bills
NFIB successfully opposed a series of costly bills introduced on behalf of the labor unions, including LB 305 (Family Medical Leave Insurance Act); LB 354 (Wage Disclosure Act); LB 420 (Ban the Box); LB 473 (Mandated Employee Rest Periods); and LB 844 (Paid Sick Leave).

2019 Legislative Challenges for Small Business

With the 2018 legislative session in our rear-view mirror, preparations have already begun for the 2019 session that commences January 9. NFIB will continue to support efforts to bring about meaningful income and property tax relief for small-business owners. Measures to provide additional workers’ compensation reform are likely to be on the legislative agenda. Small-business owners will need to remain diligent as the costly labor bills described immediately above will no doubt be reintroduced.

A top priority of NFIB Nebraska’s will be to rekindle interest in the following issues.

Tax Relief
Tax relief was a major focus last session as lawmakers considered various measures designed to lower income and/or property taxes. A late-session meeting called by the speaker of the Legislature with sponsors of the major tax relief bills introduced in the last session failed to forge a compromise and all of the measures were indefinitely postponed upon adjournment of the Legislature.

Gov. Pete Ricketts’s tax-relief measure, contained in Legislative Bill 947, was one of the casualties. Introduced by Sen. Jim Smith (Papillion), LB 947, as amended, would have retained the state’s existing Property Tax Credit Cash Fund ($224 million annually) while establishing a refundable income tax credit to offset property taxes paid by residential and agricultural landowners. The measure would also have reduced the top corporate income tax rate from 7.81 percent to 6.84 percent in five annual increments and increase funding for workforce development by $5 million annually.

Under the bill, agricultural landowners would have received a refundable income tax credit starting at 2 percent of property taxes paid and increasing annually until they reached 20 percent of property taxes paid by 2027. The income tax credit for residential landowners would have started at 1 percent of property taxes paid, up to a cap of $25 the first year, and growing to a maximum of 25 percent or $500 by 2030.

Following an extended debate, a filibuster mounted by opponents of Legislative Bill 947 resulted in the measure being removed from the agenda.

Workers’ Compensation First-Injury Reports
While efforts to make workers’ compensation first reports of injury confidential failed the last session, the measure (Legislative Bill 1015) made it further through the legislative process than ever before. The measure was advanced to the floor of the Legislature and prioritized by the Government, Military and Veterans Affairs Committee. A filibuster mounted by opponents, however, derailed the bill

Stay Informed!

At the end of each legislative week during the 2019 session, NFIB Nebraska State Director will highlight the proposals directly affecting the small-business agenda and their progress. You can stay informed by making a regular habit of checking this webpage where all his reports will be posted. You can also be notified of their posting by following NFIB Nebraska on Twtitter @NFIB_NE.

2018 Legislative Reports from State Director Bob Hallstrom and Related News Releases, Editorials

April 20—Nebraska Legislature Adjourns 2018 Session

April 13 Report—Further Tax Relief Dead for the Session

April 6, Report—Tax Reform Hits Road Block in Final Days of Session

March 30 Report—Budget Bill, Tax Relief Await Senators After Easter Break

March 23 Report—NFIB Members Urged to Push for Passage of Three Workers’ Comp Bills

March 16 Report—11 Late-Night Sessions Scheduled for Legislature

March 9 Report—Nebraska Legislature Gives First-Round Approval on State Tax Bill

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