Tax Reform Hits Road Block in Final Days of Session

Governor signs state budget bills

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending April 6

With only four days remaining in the legislative session, finishing touches have been put on the state budget and further debate on tax-relief measures is anticipated in the closing days of the session. Virtually every bill debated during the past week was subjected to a filibuster, requiring three hours of debate on each measure.

Tax Reform Stalls

Following extended debate, a filibuster mounted by opponents of Legislative Bill 947 resulted in the measure’s removal from the agenda. Supporters of the bill will need to convince the Speaker of the Legislature that they can produce the 33 votes required to overcome the filibuster in order to have the bill rescheduled for debate.

Introduced by Sen. Jim Smith (Papillion), LB 947, as amended, would retain 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 reduce 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 receive 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 start at 1 percent of property taxes paid, up to a cap of $25 the first year, and grow to a maximum of 25 percent or $500 by 2030.

Provisions contained within the original bill that would have (a) reduced the top individual income tax rate from 6.84 percent to 6.69 percent and (b) repealed the $10,000 personal property tax exemption have been removed.

During floor debate on LB 947, a vote on a procedural motion to “bracket” the bill failed on the following vote of 9-25, with those voting “no” on the motion voting in accord with the NFIB position on the legislation.

Ayes: Senators Briese, Chambers, Hansen, Morfeld, Schumacher, Vargas, Walz, Wayne, and Wishart

Nays: Senators Albrecht, Bostelman, Brasch, Brewer, Clements, Ebke, Geist, Groene, Hilgers, Hilkemann, Hughes, Kolterman, Kuehn, Lindstrom, Linehan, Lowe, McDonnell, Murante, Riepe, Scheer, Smith, Stinner, Thibodeau, Watermeier, and Williams

Present – Not Voting: Senators Baker, Bolz, Erdman, Friesen, Halloran, Harr, Howard, Kolowski, Krist, McCollister, Pansing Brooks, and Quick

Excused – Not Voting: Senators Blood, Crawford, and Larson

With LB 947 dropping off the legislative agenda, it is anticipated that an alternative property tax-reduction measure will be debated when the Legislature takes up LB 1103. The alternative proposal is designed to provide significant property tax relief immediately, but provides for increases in the state sales tax, the state cigarette tax, and other revenue-producing measures, including the elimination of the $10,000 personal property tax exemption.

Lump Sum Settlement Bill Advances

Legislative Bill 953 – Workers’ Compensation – Approval of Lump Sum Settlements: Lawmakers advanced LB 953 to Select File during floor debate this week. Introduced by Sen. Joni Albrecht (Thurston), 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.

Confidentiality of First Injury Report Bill on Hold

Legislative Bill 1015 – Workers’ Compensation – Confidentiality of WC First Injury Reports: The Legislature conducted first-round debate on LB 1015, April 3. The bill was subjected to a filibuster and was pulled from the agenda after having been debated for the required time period. In order to have the bill placed back on the agenda, the Speaker of the Legislature will need to be satisfied that 33 votes are available to invoke cloture to end the filibuster and proceed to vote on the advancement of the bill. Introduced by Senator Tom Briese (Albion), LB 1015 would provide confidentiality for first reports of injury that are filed with the Workers’ Compensation Court.

Other Bill of Interest

Legislative Bill 1058 – Faithful Delegate to Federal Article V Convention Act: Introduced by Sen. Steve Halloran (Hastings), LB 1058 would allow designated elected officials to represent the state before an Article V convention. The act would ensure that Nebraska’s delegates to any future convention are held accountable and only allowed to discuss and vote on the amendments or amendments authorized by the Nebraska Legislature. All Nebraska delegates would be required to swear (under oath) to abide by the strict limits placed on them at the convention. The bill’s provisions serve to limit the possibility of rogue delegates by including the ability for a delegate to be disqualified and the possibility that a vote by a delegate could be declared to be invalid.

During floor debate during the past week, lawmakers initially rejected the committee amendment on a vote of 20-24. The body then moved to consider advancement of the bill to Select File, which fell short on a vote of 23-21.

State Budget Approved

Gov. Pete Ricketts took little time in signing three budget bills into law with no line-item vetoes being issued. As approved, the state’s $8.8 billion, two-year budget provides for:

spending growth of 0.5 percent
continued property tax relief in the amount of $448 million over the next two years
an additional $2.7 million in funding for Nebraskans with developmental disabilities
funding for an additional 100 beds at the Nebraska State Penitentiary
an additional $3.1 million for the homestead exemption program.

Governor Ricketts had initially proposed cutting state agencies and the University of Nebraska by 2 percent this year and 4 percent next year, but the Legislature adopted a budget limiting the cuts for state agencies in the second year of the budget cycle to 2 percent and 1 percent for the university.

Previous Reports and News Releases

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