Governor’s tax package is advanced by Senators

Although the Legislature was only in session for three days last week, senators were productive in moving legislation to Final Reading. This year, there was not enough time to take up every bill that was sitting on General File due to the time a bill must lay over for review by the Revisor’s Office. Much of the remaining time was spent on legislation that was on Select File or Final Reading.

After the 59th day, the Legislature will be in recess for a few days to allow the Governor to sign or veto bills sent to his desk. Typically, the 60th day is reserved for veto overrides, if any, wrapping up the official record of the session, and offering concluding remarks. This year we will still have bills on Final Reading to vote on during the 60th day – April 18. Among the many bills that moved forward this week was LB1402 by Senator Linehan which would appropriate $10 million annually to the State Treasurer for the purpose of providing funds to scholarship-granting organizations. This bill is a revised version of LB753, the Opportunity Scholarship Act, passed by the Legislature last year and would replace that very same law if enacted. Supporters of the bill contended that students, particularly those from low-income families, deserve access to more options besides public schools. Opponents of the bill argued that LB1402 would likely be unconstitutional and would go against the will of voters who signed the Private Education Tax Credits Referendum last year.

The Governor’s tax package was also advanced again in the form of LB388. This bill as amended on Select File would create the School Property Tax Credit Fund, which includes an initial transfer of $750 million and would grow by $30 million each year thereafter. This credit would be distributed to counties and delivered to property taxpayers by reducing their tax statement for school property taxes paid, by about 22 percent. Property owners who use the current LB1107 tax credit program, which offers income tax credits to offset school property taxes paid, would see no net savings. They would, however, pay less property tax upfront and avoid the hassle of claiming the income tax credits months later.

LB388 would also remove the one percent increase in the sales tax rate and the proposed tax exemption on utilities. The bill would retain the sales tax changes on the discretionary goods and services proposed in earlier rounds of debate, such as the taxes on lottery tickets and candy. To help offset costs to lower-income Nebraskans who may pay more in the sales taxes provided for in this bill but would not otherwise directly benefit from property tax relief, the earned income tax credit was increased from the current rate of 10 percent to 15 percent.

Meanwhile, cities and counties would be capped at 3 percent or the consumer price index rate, whichever is greater, with political subdivisions able to carry over 5 percent at one time. There would be exemptions for public safety and certain emergencies to override the cap. However, if a school district votes to override their budget authority, they would have to go through the Truth in Taxation (the pink card delivered in the mail) hearing process. School districts would also only be able to carry over the percentage in which they tax.

With or without the passage of LB388 next week, there is much interest in trying to find a longer-term solution to deliver more property tax relief. That said, without passage of LB388, a special session is a very distinct possibility. The Governor has indicated he may be willing to bring the Legislature back for a special session later this year to continue work on taxes or changing the state’s electoral college voting system, but if such call is given, we can take up only the topics indicated within the scope of the call.

You can always contact me with your thoughts and opinions on bills that have been introduced. Call my Capitol office telephone number at (402) 471-2801 or send email to bdekay@leg.ne.gov. My address is: Senator Barry DeKay, District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.