Nebraska Senators Await April 25 Findings from Economic Forecasting Board

Details of property tax relief bill surface; changes in state workers’ compensation law advance

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending April 18

The legislative session is more than two-thirds complete as lawmakers adjourned on Thursday, for a long, four-day holiday weekend. The Appropriations Committee is required to send its budget proposal to the floor of the Legislature by the 70th legislative day (May 2), which may be impacted by the findings of the Nebraska Economic Forecasting Advisory Board following its meeting on April 25.

Property Tax Relief Measure Surfaces

The Legislature’s Revenue Committee unveiled a revised tax reform package on Wednesday that would increase the state sales tax rate by 3/4 of a cent as part of the funding for $500 million in additional property tax relief. The proposal has been filed as an amendment to Legislative Bill 289 and will receive a public hearing on Wednesday, April 24.

The proposal will increase state funding for K–12 education from $1 billion to $1.5 billion annually through state sales and income taxes. New revenues created by the state sales tax increase would be deposited into the state’s Property Tax Credit Cash Fund and reserved solely for state aid to schools. It is estimated that the proposal would decrease property taxes by an average of 20 percent.

In addition to the proposed state sales tax rate increase, the proposal would raise the cigarette tax by 36 cents a pack, remove sales tax exemptions for sales of candy, pop, and bottled water and subject pet-related services, moving services, plumbing, heating and air conditioning services and storage services to the sales tax. The amendment would also eliminate the personal property tax exemption for the first $10,000 of personal property valuation.

The Revenue Committee amendment would also provide every school district with at least one–third of its funding through state aid and provide property owners with a 10 percent reduction in taxable valuation (reduces residential and commercial valuation from 100 percent to 90 percent of taxable value and agricultural land from 75 percent to 65 percent of taxable value). The proposal also places a new “lid” on expenditures of property tax revenues based on the Consumer Price Index – which is estimated to be approximately 2.1 percent to 2/3 percent – plus growth within a district.

Finally, the measure would reduce the maximum school levy from $1.05 to $.95 and allow the Omaha Public Schools an additional $.06 levy to address its pension shortfall.

Workers’ Compensation Priority Bill Sent to Floor

The Business and Labor Committee has advanced Legislative Bill 418 to General File. Introduced by Sen. Michaela Cavanaugh (Omaha), and designated as a priority bill by the Business and Labor Committee, LB 418, in its original form, would have required collection agencies to cease attempts to collect a debt if a case is pending in the Nebraska Workers’ Compensation Court and the debt is alleged to be subject to Neb.Rev.Stat. Section 48–120 (medical, surgical and hospital services).

Prior to advancing the bill, the committee adopted an amendment that expanded the restriction on collection efforts to any provider of services, supplier of services, collection agency, collector, or creditor attempting to collect a debt incurred against an employee or his or her spouse for treatment of a work-related injury while the matter is pending in the Compensation Court until final adjudication of the case regarding such debt.

In order for the restrictions on debt collection to be effective, the entity attempting to collect the debt for treatment of a work-related injury would need to have been provided with written notice containing the provider’s name, employee’s name, date of injury and a description of the injury, together with the filing date in case number pending in the Compensation Court. A subsequent notice, provided within 30 days after the initial notice would need to specifically identify the debt upon which collection should be stayed, unless identification was made in the initial notice.

The Business and Labor Committee amendment also incorporated the provisions of Legislative Bill 360, introduced by Sen. Matt Hansen (Lincoln). The amendment would provide for settlement of claims of nonresident alien dependents by authorizing a nonresident alien dependent, at any time prior to final settlement, to file with the Workers’ Compensation Court a power of attorney designating any suitable person residing in the state to act as an attorney-in-fact and Workers’ Compensation Court proceedings. The power of attorney could act as attorney-in-fact for the nonresident alien in court proceedings if the court determines that the interests of the nonresident alien dependent will be better served by the attorney-in-fact than by the consular officer. The attorney-in-fact would be required to furnish a bond satisfactory to the Compensation Court conditioned upon the proper application of any money received as compensation under the Workers’ Compensation Act.

While NFIB is neutral on LB 418, it supports the provisions of LB 360. Although there have been no amendments proposed to the bill that are opposed by NFIB, we will remain watchful for any adverse amendments that could be raised when the bill is considered on the floor of the legislature.