Will Increasing the Sales Tax and Adding it to Some Goods and Services Make Property Tax Relief Worth It?

Revenue Forecasting Board says Nebraska will collect an extra $45 million in the current fiscal year

State Director Bob Hallstrom reports from Lincoln on the small-business agenda for the legislative week ending April 26

Lawmakers finished the week with a light agenda of bills on Final Reading after having rejected efforts to repeal the death penalty (Legislative Bill 44) on Thursday. Budget recommendations of the Appropriations Committee will be advanced to the floor early next week and late-night sessions begin on Monday.

Pushback on Property Tax Relief Bill

The Legislature’s Revenue, Education, and Retirement Committees conducted a joint hearing on an amendment to Legislative Bill 289 designed to provide property tax relief to Nebraska taxpayers. The committees received almost seven hours of testimony, with four witnesses testifying in support, 12 witnesses in a “neutral” capacity, and almost 50 individuals and organizations expressing opposition to the proposed amendment to LB 289.

NFIB joined a diverse group of entities in opposing the proposed amendment, including cities, counties, urban schools, the Nebraska State Education Association, Chambers of Commerce and other business organizations and policy think tanks.

The proposed amendment to LB 289 would provide property tax relief by raising state aid to K–12 schools by an estimated $575 million after two years. Increased revenues would be derived from a three-quarter-cent hike in the state sales tax rate, new sales taxes on pop, candy and bottled water and increases in taxes on cigarettes and the documentary stamp tax associated with real estate transfers. In addition, a sales tax would be imposed on services provided by plumbers, movers, self-service storage facilities and veterinarians.

The Revenue Committee met in executive session on Thursday and was expected to reconvene after adjournment on Friday to consider the pending amendment, as well as other alternatives, in an effort to advance property tax relief legislation to the floor of the Legislature.

Forecasting Board More Optimistic

The Nebraska Economic Forecasting Advisory Board met on Thursday and predicted the state will collect an additional $45 million in revenues in the current fiscal year. State law requires the additional funds to go into the state’s cash reserve, frequently referred to as the “rainy-day fund.”

The Forecasting Board action came on the heels of an Appropriations Committee vote to lower the proposed addition to the Property Tax Credit Cash Fund by half in order to enhance the state’s rainy-day fund. The committee voted to limit the $51 million annual increase in the Property Tax Credit Cash Fund recommended by Gov. Pete Ricketts to $26 million in each of the next two years.

Based on revenue projections issued by the Forecasting Board, Governor Ricketts has called on lawmakers to reinstate full funding for the additional $51 million for the Property Tax Credit Cash Fund. The Appropriations Committee will submit its recommended budget for consideration by the full Legislature on or before May 2.

Workers’ Compensation Priority Bill Moves On

The Legislature gave first-round approval to Legislative Bill 418 on Wednesday. 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 Legislature 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.

As amended, the bill also includes 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.