Further Tax Relief Dead for the Session

Date: April 13, 2018

Legislative impasse may spur ballot initiative

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending April 13

Only one day remained in the 2018 legislative session after lawmakers adjourned on Wednesday. The Legislature will reconvene on April 18 to consider the remaining bills on Final Reading and conclude its business for the year.

Gov. Pete Ricketts has five days (excluding Sundays) to return any vetoes to the Legislature. The long, five-day recess allows the Legislature an opportunity to override the veto of any bills passed on or before Day 59. The governor will have “pocket veto” authority to veto any bills passed on Day 60 because the Legislature will not have an opportunity to override the veto of any bills passed on the final day of the session.

Tax Relief Reaches an Impasse

Despite repeated efforts to reach a compromise on a series of major tax bills, the legislative session will conclude without further tax relief being adopted.

Late last week, lawmakers debated Legislative Bill 1103, introduced by Sen. Curt Friesen (Henderson), that would provide a minimum amount of state aid to each public school district. The measure is designed to ensure that each school district receives no less than 25 percent of its basic funding needs in the form of state aid. During floor debate on LB 1103, an amendment was proposed that would replace the bill and provide funding for additional school aid and property tax relief by raising the state sales tax from 5.5 percent to 6.5 percent, raise taxes on a pack of cigarettes from 64 cents to $2.14, and impose a surtax on individuals earning at least $500,000 in income. No action was taken on the bill or the amendment.

Last weekend, Speaker of the Legislature Jim Scheer convened a meeting of six senators who sponsored major tax bills this session in an effort to reach consensus to allow a tax relief measure to be passed this year. With no consensus having been reached, all remaining tax relief measures will be indefinitely postponed upon adjournment of the Legislature.

Efforts are underway to collect signatures to place an initiative on the General Election Ballot in November. The Initiative, which contains provisions similar to Legislative Bill 829, which was opposed by NFIB, proposes $1.1 billion in property tax relief without identifying the spending cuts and tax increases that may be required to fund the proposed property tax relief.

Workers’ Compensation Bills Advance

On the final day of the session, when bills could be advanced from Select File to Final Reading and still receive final approval, the following workers’ compensation bills supported by NFIB moved to the final stage of debate.

Legislative Bill 953 – Workers’ Compensation – Approval of Lump Sum Settlements: Lawmakers advanced LB 953 to Final Reading during floor debate this week. Introduced by Senator Joni Albrecht (Thurston) on behalf of NFIB, LB 953 would address issues relating to the approval of lump-sum settlements by the Workers’ Compensation Court. The bill would establish a conclusive presumption that the 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 would 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.

The bill also addresses a recent Workers’ Compensation Court decision regarding the enforceability of late-payment penalties. Currently, a 50 percent penalty is imposed on each payment to the employee that is made more than 30 days after the release is filed with the Compensation Court. LB 953 would make the entry of an order of dismissal a prerequisite to the discharge of a defendant from liability, thereby clarifying that the penalty provision would still apply until the Court enters an order of dismissal with prejudice.

Amendments were also adopted to LB 953 that will enhance the ability of medical providers to recover under the health insurance coverage of an employee for expenses that remain unpaid as part of the lump sum settlement, which are disputed and for which compensability has been denied by the employer.

Legislative Bill 957 – Workers’ Compensation – Electronic Payment of Benefits: Introduced by Sen. John Lowe (Kearney), LB 957 would authorize, upon 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).

Confidentiality Bill Fails

As reported in last week’s legislative update, Legislative Bill 1015 was removed from the agenda after encountering a filibuster during General File consideration. Under a practice implemented the last session by Speaker Scheer, the sponsor of a bill under such circumstances must demonstrate sufficient support (33 votes) for a cloture motion before the measure will be scheduled for additional debate. Efforts to place LB 1015 back on the agenda in the waning days of the session did not garner sufficient support for the measure to receive further consideration. As a result, LB 1015 will be indefinitely postponed at the end of the session. Introduced by Sen. Tom Briese (Albion), LB 1015 would have provided confidentiality for first reports of injury that are filed with the Workers’ Compensation Court.

Other Bill of Interest

The following bills, supported by NFIB, have been given final approval by the Legislature and are awaiting the governor’s signature.

Legislative Bill 738 – Income Taxation – Social Security Benefits: Introduced by Sen. Brett Lindstrom (Omaha), LB 738 will use an index for inflation for taxation of social security benefits, similar to the system in place for Nebraska’s state income tax brackets.

Legislative Bill 1090 – Income Taxation: Introduced by Sen. Jim Smith (Papillion) and designated as a priority bill by the Revenue Committee, LB 1090 will make adjustments to state tax laws in order to neutralize effects resulting from federal tax reform. The measure will:

  • 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.

Previous Reports and News Releases

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

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.”]

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