Session a Third Complete, Tax Reform Still on Front Burner

Date: February 02, 2018

NFIB lobbying for passage of three of four workers’ compensation bills

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending February 2

Just over one-third of the 2018 legislative session has been completed, and lawmakers continue to process General File, non-priority bills. In addition, the Legislature is taking action on the initial individual senator and committee bills that have been designated as priorities. It is anticipated that the body will soon turn exclusively to priority bills, which will then dominate the agenda for the balance of the session.

Progress on Tax Relief

The Revenue Committee conducted a public hearing January 31 regarding Gov. Pete Ricketts’ tax relief proposal. Introduced by Sen. Jim Smith (Papillion), Legislative Bill 947 would provide increased property tax relief by restructuring the state’s current Property Tax Credit Cash Fund into a new, refundable income tax credit available only to owner-occupied households in Nebraska and agricultural landowners who reside in the state.

The income tax credit would be equal to 10 percent of the property tax bill on taxpayers’ homes or farms, with the credit for homeowners capped at $230. The bill would provide property tax relief in future years when state revenue exceeds revenue forecasts. Individual and corporate income taxes would also be reduced, with the top individual income tax rate dropping from 6.84 percent to 6.75 percent in 2019 and to 6.69 percent in 2020. The maximum corporate tax rate (paid on income of more than $100,000) would be reduced from 7.81 percent to 6.75 percent in 2019, and to 6.69 percent in 2020. The measure would propose an additional $10 million in funding over the next two years for workforce development and repeal the exemption of the first $10,000 from personal property taxation.

During the hearing, Governor Ricketts unveiled a proposal that would provide greater property tax savings in the first year for residential and agricultural landowners and guarantee expanded property tax relief in future years. The amendment proposed by the governor would increase the initial property tax credits for homeowners from 10 percent, with a cap of $230, to 12 percent with a cap of $280. The plan would eliminate “triggers” for future growth in property tax relief and replace them with provisions to increase the credits by 2 percent per year in two of every three years, until the credits reach 30 percent of property taxes paid by 2031. It is anticipated that the additional costs associated with the proposed amendment will require an additional $40-45 million to be drawn from the state’s Cash Reserve Fund.

Workers’ Compensation Bills Slated for Hearings

The Business and Labor Committee has scheduled the four remaining workers’ compensation bills for public hearing February 5. NFIB will present testimony on each of the following measures.

Legislative Bill 952 – Workers’ Compensation – Restrictions on Multiple Dismissals of Actions: Introduced by Sen. Joni Albrecht (Thurston), LB 952 would restrict the ability of an employee to dismiss an action against the same defendant in the Compensation Court that is based upon the same cause of action after having previously dismissed the action, unless otherwise allowed by the Compensation Court in the “interests of justice.” (NFIB Position – Support)

Legislative Bill 953 – Workers’ Compensation – Approval of Lump Sum Settlements: Also introduced on behalf of NWCEF by Senator Albrecht, 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 affirms 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. (NFIB Position – Support)

Legislative Bill 928 – Workers’ Compensation – Death and Burial Benefits: LB 928, introduced by Sen. Mike McDonnell (Omaha), would revise the manner in which an employer’s responsibility for burial expenses is determined. Currently set at $10,000, the burial expense would be increased to 14 times the state’s average weekly wage (approximately $10,600) and be automatically adjusted annually thereafter. The legislation would also establish a $25,000 “death benefit” in cases involving the death of an employee resulting from a workplace accident who has no spouse, child, or other dependent entitled to benefits under the Workers’ Compensation Act. The automatically escalating burial benefit and proposed “death benefit” under LB 928 will result in increased costs for employers. (NFIB Position – Oppose)

Legislative Bill 957 – Workers’ Compensation – Electronic Payment of Benefits: LB 957, introduced by Sen. John Lowe (Kearney), 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). (NFIB Position – Support)

NFIB Testifies on Tax Bills

NFIB testified on the following bills of interest, which were considered during committee hearings during the past week.

Legislative Bill 824 – Income Taxation – Social Security Benefits: Introduced by Sen. Adam Morfeld (Lincoln), LB 824 would, for taxable years beginning on or after January 1, 2019, reduce federal adjusted gross income by the amount received as benefits under the federal Social Security Act to the extent such benefits are included in federal adjusted gross income. (NFIB Position – Support)

Legislative Bill 1074 – Income Taxation: Introduced by Sen. Tony Vargas (Omaha), LB 1074 would, effective for taxable years beginning on or after January 1, 2018, establish an additional individual income tax rate bracket of 7.84 percent for incomes over $100,000 for single individuals and incomes over $200,000 for married filing jointly. The measure would also impose an additional tax of 1 percent on that portion of the taxpayer’s Nebraska taxable income in excess of $1 million and an additional tax of 2 percent on that portion of the taxpayers Nebraska taxable income in excess of $2 million. (NFIB Position – Oppose)

Upcoming Hearings

Legislative Bill 726 – Mandated Benefits: The Banking, Commerce, and Insurance Committee will conduct a public hearing February 5 on LB 726 (Mandated Benefits). Introduced by Sen. Justin Wayne (Omaha), LB 726 would require insurance coverage for in vitro fertilization procedures for any insurance plan that provides coverage for pregnancy-related procedures. NFIB will submit testimony in opposition to the measure, citing the increased cost in providing health-care benefits for employees, should the legislation be adopted.

Legislative Bill 1090 – Income Taxation: Sen. Jim Smith (Papillion) has introduced LB 1090, which 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 $220 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.

A companion bill, Legislative Bill 1048, introduced by Sen. Burke Harr (Omaha), would retain Nebraska’s personal exemptions, but exclude individuals with federal adjusted gross income of more than $100,000 and married couples with incomes greater than $200,000.

NFIB will present testimony in support of both of these measures to encourage lawmakers to allow these funds to remain in the pockets of Nebraska’s taxpayers.

Small Business Day at the Capitol

NFIB/Nebraska will co-sponsor a Small Business Day at the Capitol on 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. Governor Ricketts is expected to speak, and there will be a legislative briefing by state senators.

Details on the time and location of Small Business Day at the Capitol will be released soon. Check for the latest information.

Previous Reports and News Releases

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

Gov. Pete Ricketts testifying for Legislative Bill 947. Photo courtesy of Unicameral Update, “The Nebraska Legislature’s official news source since 1977.”

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