‘Super Seven' engineer ‘Grand Compromise’ on property tax cut, economic development incentives
State Director Bob Hallstrom reports from Lincoln on the session’s end, August 13.
The Legislature adjourned sine die on Thursday, having concluded all of its work for the 2020 legislative session. The final 17 days of the unique session, interrupted by the COVID-19 pandemic, were marked by angry exchanges and passage of a significant property tax relief/economic incentives package. The Legislature completed the session having passed 140 individual bills, with nearly 100 other measures also adopted by way of amendment to those bills.
Farewell
The following senators, who are departing the Legislature due to term-limits, were recognized on the final day of the session:
- Sen. Kate Bolz (Lincoln)
- Sen. Ernie Chambers (Omaha)
- Sen. Sue Crawford (Bellevue)
- Sen. Sara Howard (Omaha)
- Sen. Rick Kolowski (Omaha)
- Sen. Jim Scheer (Norfolk)
Property Tax Relief/Economic Development Incentives
Long-awaited and much-needed property tax relief and economic development incentive measures were approved and sent to Gov. Pete Ricketts for his signature on Thursday morning. Designated as the “Grand Compromise” and tailored by a group of senators, known as the “super seven,” the compromise would provide modest property tax relief initially, but could eventually defray about 18 percent of property taxes paid to support K–12 schools, dependent on future tax revenue growth.
The measure (LB 1107) updates the state’s primary economic incentive program and pledges $300 million toward the proposed $2.6 billion NExT Project at the University of Nebraska Medical Center in Omaha.
LB 1107 will retain the current Property Tax Credit Program, at a minimum level of $275 million a year in state tax credits, and will create an additional state tax credit, in the form of a refundable income tax credit against individuals and entities property tax bills for local schools. To fund the income tax credit, which is estimated to provide a reduction of approximately 6 percent on individuals and entities tax bills for local schools in the first year, $125 million will be set aside for this purpose. In subsequent years, the fund will increase based on the growth of state tax receipts, with half of the revenue increases exceeding 3.5 percent per year devoted to the new Nebraska Property Tax Incentive Act until the state’s Cash Reserve Fund reaches $500 million. Once the state’s Cash Reserve Fund reaches $500 million, all of the increases exceeding 3.5 percent per year will be devoted to the Property Tax Incentive Act. Upon the credit fund reaching $375 million, the fund will increase each year by the percentage increase in statewide property valuations, with the state being obligated after five years, to maintain the tax credit program at a level of $375 million, regardless of the increase in tax receipts.
With respect to the economic development incentive portion of the bill, the ImagiNE Act – the replacement for the Nebraska Advantage Act which expires at the end of the calendar year – will be capped at $25 million each year in the first two years, rising to $150 million by year five.
Workers’ Compensation Bill Given Final Approval
The Legislature has given final approval to Legislative Bill 963, which was introduced by Sen. Tom Brewer (Gordon), and designated as a priority bill by Sen. Mike McDonnell (Omaha).
LB 963 will modify the standards for recovery of workers’ compensation benefits for “mental–mental” injuries to first responders and front-line state employees. The bill will allow a first responder to establish prima facie evidence of a mental injury or mental illness if:
- the first responder has undergone a mental health examination upon entry into service as a first responder or subsequent to such entry and before the onset of the mental injury or mental illness and the examination did not reveal the mental injury or mental illness for which the first responder seeks compensation
- testimony or an affidavit from a mental health professional is presented stating the first responder suffers from a mental injury or mental illness
- prior to the employment conditions which cause the mental injury or mental illness, the first responder had participated in resilience training and updated the training at least annually thereafter.
The legislation will also require the Department of Health and Human Services to reimburse a first responder for the cost of annual resilience training not reimbursed by the first responder’s employer. The bill also contains a “sunset” of January 1, 2028, which will provide for termination of the law as of that date, unless the Legislature elects to reenact and extend its provisions.
LB 963 also contains the provisions of LB 448 (Workers’ Compensation – Burial Benefits). As amended, LB 963 will revise the manner in which an employer’s responsibility for burial expenses is determined. Under the bill, the maximum burial benefit will be increased from $10,000 to $11,000 and subject to adjustment based on future changes to the Consumer Price Index, rather than increases in the state’s average weekly wage. The adjustments, which will begin in 2023, will be capped at 2.75 percent per annum and increased by at least 1 percent per annum.
Other Bills of Interest
- Legislative Bill 153 – Military Retirement Income: Lawmakers have given final approval to a bill (LB 153), granting a 50 percent state income tax break for military retirees. Introduced by Sen. Tom Brewer (Gordon) and designated as a priority bill last session by Sen. John Lowe (Kearney), LB 153 will apply to veterans who are receiving a pension, by providing a 50 percent state income tax exemption for military retirement benefits. The effective date of the tax cut was pushed back to delay any fiscal impact until the 2021-2022 fiscal year. The measure is expected to have an annual fiscal impact of $12-14 million.
- Legislative Bill 632 – Prohibition of Local Regulation of Reusable Containers: The legislature has given final approval to a bill (LB 632), designated as a priority bill by the Natural Resources Committee and which contains provisions of legislation supported by NFIB (LB 861). The provisions of interest to NFIB will prohibit a county, municipality, or agency from adopting, enforcing, or otherwise administering an ordinance or resolution that prohibits the use of or that set standards, fees, or requirements, regarding the sale, use, or marketing of consumer merchandise and containers.
During Select File consideration of LB 632, an amendment that would have stripped the bill of the state preemption of local ordinances provisions was defeated on the following vote of 15-28, with a “no” vote in support of the NFIB position:
Yes: Senators Blood, Cavanaugh, Crawford, DeBoer, M. Hansen, Howard, Hunt, Lathrop, Morfeld, Pansing Brooks, Quick, Vargas, Walz, Wayne and Wishart
No: Senators Albrecht, Arch, Bostelman, Brandt, Brewer, Briese, Clements, Dorn, Erdman, Friesen, Geist, Gragert, Groene, Halloran, B. Hansen, Hilgers, Hughes, Kolterman, La Grone, Lindstrom, Linehan, Lowe, McDonnell, Moser, Murman, Scheer, Slama, and Williams
Not Voting: Senators Bolz, Chambers, Hilkemann, Kolowski, McCollister and Stinner.
Previous Reports and News Releases
- August 7 Report—Senators Decide Against Decoupling Nebraska Tax Code from Federal CARES Act Benefits
