This week lawmakers finished with bill introduction, introducing 469 new legislative bills.
Senators continued debating 2017 carryover bills in the morning and commenced the public hearing process on 2018 introduced bills in the afternoons. With 469 hearings ahead of them, the public hearing process is scheduled to take until February 27th to complete.
Having expended 11 days of this year's 60-day session already and given the length of time consumed for public hearings, it only leaves approximately 69 hours (3hrs/day for the next 23 days) of time on the floor for the Legislature to debate bills until the public hearing process is completed. By the time the public hearing process is completed there will be only 26 days to complete the work of the Unicameral. There are six legislative days or approximately 39 hours of floor debate between the end of the hearing process and the beginning of "late night" session days, which are scheduled to start anytime on March 12th or after. If you figure a 10-hour day, on average, for the remaining 20 days (200 hours) the 2018 Legislature has approximately 239 working hours before they are scheduled to adjourn Sine Die on April 18th.
While 239 hours may sound like an adequate time to complete the 2018 Legislative Session there is a great deal of work, some of it heavy lifting, like making adjustments to the 2017-2018 budget and the 2018-2019 budget do to revenue shortfalls. Add to this the fact that each senator gets one priority bill, committees two, and the Speaker 25 additional priority bills, if your bill is not prioritized or amended into another bill it has no chance of passing this session. Two -hundred and thirty-nine hours is simply not enough time.
Introduced Bills of Interest This Week
LB1084, introduced by Senator Briese, would make multiple changes to Nebraska taxing authority in order to provide immediate and substantial property tax relief while shielding local school district funding.
The bill attempts to eliminate the current sales tax exemption on 25 plus items including, but not limited to: soda pop, candy, bottled water, painting services, investment services, personal care services, real estate services, meat slaughtering, etc.
At the same time, it looks to increase the cigarette tax by $1/pack, apply a surcharge (2.5% on incomes over $500,000 to $1 million and 5% on those over $1,000,000, eliminate the personal property tax exemption, and direct any increase in sales tax revenue from internet sales to the property tax credit fund. - LB1084 contains the same language as in the amended version of LB44, the internet sales tax bill. - The bill is estimated to raise between $700-$800 million in annual revenues putting $600 million into the property tax credit fund.
LB1108 wouldincrease the state sales tax rate to 6% from its current level of 5.5%, estimating to raise $160 million, of which $71million would go to state aid to schools. The bill also eliminates the trade in allowance on autos and boats, all-terrain vehicles, and utility type vehicles, raising approximately $18 million that would be allocated to the transportation infrastructure bank, along with light rail.
LB884, as stated by Senator Harr, the introducer of the bill, "would authorize a county to impose its own tax in addition to a municipality's. It also would allow counties to use that sales and use tax revenue for economic development or the development of manufacturing or industrial sites".
LB1022 is a bill that would enact an irrigation water tax of 1/10th of one cent per gallon of water used irrigate agricultural land and horticultural land.
As stated in the bill:
"(2) Covered water well means any water well used to irrigate agricultural land and horticultural land and capable of producing at least five thousand gallons of water per day.
9 Sec. 3. (1) There is hereby imposed a tax upon the use of water to irrigate agricultural land and horticultural land. The tax shall be equal to one cent for every ten gallons of water pumped from a covered water well and shall be paid by the owner of the agricultural land and horticultural land being irrigated"
Also added in the bill is the following underlined language. (the remaining language is current statute).
(2) Agricultural land and horticultural land as defined in section 5 77-1359 shall constitute a separate and distinct class of property for purposes of property taxation, shall be subject to taxation, unless expressly exempt from taxation, and shall be valued at seventy-five percent of the its actual value such land has as dryland. For any such land that is irrigated, the added value associated with such irrigation shall be disregarded for purposes of determining the land's taxable value.
The bill creates a "School Aid Fund" where the irrigation tax revenue is to be credited shall be used to provide payments to school districts that did not receive equalization aid under the Tax Equity and Educational Opportunities Support Act (TEEOSA).
There are also provisions in the bill that change the valuation of agricultural land for property tax purposes.
LB1021 removes several exemptions from sales and use tax for uses in agriculture. They include: several types of fuel, as listed below in the new language being added to the bill, when more than fifty percent of the amount purchased is for use directly in the applications listed below. (note: new language being proposed in LB1021(below) is underlined, text that is not underlined is existing state statute)
77-2704.13 Sales and use taxes shall not be imposed on the gross receipts from the sale, lease, or rental of and the storage, use, or other consumption in this state of sales and purchases of electricity, coal, gas, fuel oil, diesel fuel, tractor fuel, propane, gasoline, coke, nuclear fuel, butane, wood as fuel, and corn as fuel when more than fifty percent of the amount purchased is for use directly in processing, manufacturing, or refining, in the generation of electricity, in the compression of natural gas for retail sale as a vehicle fuel, or by any
hospital. For purposes of this section, processing includes the drying and aerating of grain in commercial agricultural facilities.
The bill also removes the exemption for water used for agricultural irrigation and farm machinery from sales and use tax.
LB1088, adopts the Nebraska Education Formula and the Remote Seller Sales Tax Collection Act, terminate the Tax Equity and Educational Opportunities Support Act and the Property Tax Credit Act, and eliminate certain tax exemptions.
This bill is 200 pages in length and among some of its provisions:
- it increases the state sales tax rate by ½% from 5.5% to 6.5%;
- removes the exemption from sales and use tax for repair and replacement parts of motor vehicles, watercraft, rolling stock (both railroad and common/contract carriers).
- Eliminates the Property Tax Credit Fund and appropriates any funds in such to the Nebraska Educational Fund that is established in the bill.
- Adds a similar section to that of LB44 (Internet Sales Tax bill) to collect sales and use tax on internet sales.
- Removes the same exemptions that are found in LB1021 in reference to fuels, and agricultural equipment for sales and use tax.
- Makes multiple changes to school aid funding and school/teaching requirements.
LB1074 would raise the amount of state income tax paid by those making over $100,000 annually from the current rate of 6.84% to 7.84%, along with a surcharge of 1% on earnings over $1 million and 2% on those making over $2 million annually.
LR290CA would change the constitution, by amending it, to allow the Legislature to value real property in figuring property tax value at the market value of the property on its date of purchase.
LB1071 would allow the use of a turn back use of state sales tax for the use in infrastructure needs.
LB1026 would authorize issuance of highway bonds, create a fund, and change existing highway funding provisions. Twenty-five (25%) of funds raised would go to expressways and federally funded priority corridors. The remaining 75% to high priority transportation projects, as determined by the NDOT.
LB1090 is a bill that was introduced Thursday of this week by Senator Jim Smith and supported by the Nebraska Department of Revenue that would makes adjustments to Nebraska's tax code in light of the recently passed income tax reform on the federal level. The bill is intended to offset the projected $200 million in state tax increases to Nebraskans as a result of the lose of exemptions in the federal tax policy changes.
In other legislative action this week Senator Brewer announced his priority bill, LB1054, a bill to change provisions relating to hearings before the Nebraska Power Review Board and electric generation using wind.
Up Coming Hearings of Interest
LB944 makes numerous General Fund Cash Fund Transfers including:
- ENVIRONMENTAL QUALITY, DEPARTMENT OF (84) Superfund Cleanup - The recommendation includes eliminating General Funds in the amount of $316,200 for aid earmarked towards Superfund cleanup in FY 2017-18 and FY 2018-19. LB 331 (2017) authorized up to $1,500,000 per fiscal year to be transferred from the Petroleum Release Remedial Action Cash Fund to the Superfund Cost Share Cash Fund. This funding will allow the state to continue to meet Superfund cleanup obligations without relying on General Funds.
- FIRE MARSHAL, STATE (21) Underground Storage Tank Cash Fund Transfer - The November 30, 2017 balance in the Underground Storage Tank Cash Fund represents more than 150 percent of the average annual cash expenditures from the fund. The recommendation includes a transfer from this fund to the General Fund of $170,325 in FY 2018-19
LB 899 is a bill which prorates property values for property tax purposes once a property becomes destroyed by fire or some other natural disaster, such as a tornado or flood. The bill would require county equalization boards to adjust the assessed valuations of destroyed property to match that portion of the year when the property was intact and not destroyed. The current system unfairly taxes property owners for property which has been destroyed. For instance, a property owner should not have to pay property taxes on the full assessed value of their home on January 1 when their home was destroyed on January 2. Instead, the value of their property should reflect those days when their home was intact and livable.
LB829 (Erdman),introduced to provide $1.1 billion in property tax relief will be heard before the Revenue Committee on Thursday of this coming week.
As stated in the Bill's Statement: "LB 829 is a property tax relief bill. The bill would enable Nebraska property owners to get a credit or refund on their State income tax return equal to 50% of that portion of their property tax bill which goes to fund K-12 education. For most property owners LB 829 will result in a 30% reduction in their property taxes.
The median property tax rate in Nebraska is 1.76% of a property's assessed fair market value. Currently, Nebraska ranks as the 4th highest median property tax rate in the nation. Only New Jersey, New Hampshire and Texas have higher median property tax rates than Nebraska. Nebraskans pay more in property taxes than all our neighboring states. On average, Nebraska property owners pay $2,164 in property taxes every year.
Property taxes have escalated in recent years while median household incomes have remained stagnant. Since 2006 median household incomes have remained steady near $57,000 per year, according to the Department of Numbers. Meanwhile, property taxes have skyrocketed. For instance, according to the Nebraska Department of Property Assessment & Taxation, in 2006 the total amount of property taxes collected in Morrill County, where I live, was $7,390,027, but by 2016 that number had climbed to $17,569,558. That's an average increase of more than one million dollars per year in a county with only 5,042 residents, according to the 2010 Census. So, property taxes have been increasing at an alarming rate while household incomes have remained stagnant.
It is the responsibility of the State, not local governments, to provide for instruction. The Nebraska State Constitution says, "The Legislature shall provide for the free instruction in the common schools of this state of all persons between the ages of five and twenty-one years." Therefore, the most appropriate place to enact a credit or refund for the purpose of property tax relief comes from that portion of every property tax bill which funds K-12 instruction."
