Ditto, Ditto, Ditto, this week was a repeat of last week, Taxes, Taxes, Taxes, was the hot topic in the Legislature and with the $55 million added shortfall that the Nebraska Economic Forecasting Board delivered on Wednesday, passing a balanced budget just became that much more difficult.
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Senators began floor debate on the state's $8.9 billion biennium budget on Monday and over two days and after eight hours of floor debate, along with a cloture vote, advanced the mainline budget (LB327) to select file on a 36-1 vote.
Some highlights of what is contained in LB327 are:
- $62.4 million for the Tax Equity and Educational Opportunities Support Act (TEEOSA);
- $35.6 million for Medicaid;
- $15.4 million for staffing, programs and equipment for the state Department of Correctional Services;
- $11.4 million for the courts under the Justice Reinvestment Act and;
(Appropriations Committee Chair -
Senator John Stinner (Gering)
- proposed cuts of $24.7 million to state agencies ($13 million to the university system and $9 million in foster care contracts with private providers of kinship placements for state wards).
Appropriations Chair, Senator John Stinner, commented on how this budget reflects the committee's commitment to K-12 education, property tax relief and a continuing effort to fix the state's corrections system.
Much of the floor debate focused on an amendment offered by Transportation Committee Chair, Curt Friesen, to reduce the transfer, $4.4 million FY2017-2018 and $2.1 million FY2018 -2019 from the Highway Cash Fund to the Roads Operations Cash Fund.
While Senator Friesen said the purpose of the amendment was to prevent the use of motor fuel tax receipts from being diverted for purposes other than roads infrastructure, the funds being transferred are really general sales tax receipts that are being diverted to road construction through the passage of LB84(2011).
The Appropriations Committee felt that since the funds are general sales tax revenues that it was justified in making the transfer to help balance the state's budget, as these funds were general revenue and not specific user fees to road usage.
After several hours of debate, the amendment was defeated April 26 on a 20-27 vote.
Another amendment, offered by Senator Schumacher, would have removed a provision to prioritize Federal Title X Program funds to health centers, community health centers, hospitals, tribal government entities and state and local government entities. These funds are used to subsidize such things as Pap smears, STD testing, cancer screening and family planning services. The amendment was defeated by a 17-19 vote.
Subsequently, a successful 42-6 cloture motion (needed 33), offered by Speaker Scheer, was adopted and the bill was then advanced 36-1.
With only 17 legislative days left in the session, Speaker Scheer announced that he sought and was given approval by the executive committee, to use his power as Speaker to designate the budget bills as Speaker Major Proposal bills, allowing the Speaker to schedule the order of amendments to such bills.
The reason that Speaker Scheer used his authority is the fact that several (appx. 20) amendments have been filed on the mainline budget bill as a strategic move to not allow other amendments to be adopted to such. In the normal course of the legislative process, amendments must be taken up in the order in which they were filed. When a bill is filibustered and a cloture vote is invoked, only amendments that are currently being debated can be voted up or down, prior to action on the bill itself being taken. In the case of the mainline budget bill, there are amendments which need to be addressed in getting the bill into its final form, but with the time spent debating the budget and the number of amendments filled, the needed amendments would not be able to be addressed. Having the bill being designated as a Speaker Major Proposal now allows the speaker to set the order of amendments to allow those vital to the bill to be addressed.
Under the legislature's rules the budget needs to be passed by the 80th legislative day or May 10th.
Action by The Legislature This Week at A Glance
Monday
- This week started off with senators passing 51 bills, including "A" bills on Final Reading, which took until midafternoon on Monday. This was followed by the remainder of the afternoon discussing LB595, introduced by Senator Groene to provide for the use of physical force or physical restraint or removal from a class in response to student behavior. After three hours of debate the Legislature adjourned for the day at around 5:30p.m., taking no action on the bill.
Tuesday
- began with all morning debate on LB233, a bill introduced by Senator Smith (Revenue Chair) and prioritized by Senator Stinner (Appropriations Chair), that was originally introduced at the request of the Department of Revenue to make several technical changes to various revenue and taxation provisions.
The bill was then amended, with a second hearing being held since the intent of the bill was changed dramatically, to suspend three tax credits: child care and education providers and staff, investors in early stage companies, and to property owners. By cutting these tax credits the state would save approximately $21.7 million over the next year. These savings then could be used to help offset the state's budget deficit.
Here again, this bill has a great deal of opposition and thus after some debate it was passed over for the time being, as Speaker Scheer felt that debating LB233 at this time was not product use of floor time when debate had not yet begun on the budget, nor had the forecasting board meet yet. It is unknown at this time if LB233 will return to the agenda.
A handful of other bills were debated before LB268, a bill to change court and other provisions relating to medical assistance reimbursement was debated for a lengthy time frame.
LB268, as stated in the bill's Statement of Intent, "deals with the ever-increasing problem brought on by the increasing cost of retirement and nursing facilities for the aged on one hand and a desire to pass accumulated wealth to heirs on the other." The bill addresses Medicaid reimbursement payments are an incurred debt payable potentially through assets (real estate, trusts, corporations, LLC's, or other entities, as well as income derived therefrom. Basically, the bill allows the looking to see if one has transferred any assets or continues to derive an income from previously owned assets that could be used to reimburse Medicaid.
The bill was advanced to Final Reading on a voice vote. (Note: the bill passed on General File by a 37-0 vote).
Wednesday
- Senators started the day advancing from Select File 23 of the 50 plus Consent Calendar bills, followed by continued debate of the budget.
Thursday
- Lawmakers spent until early afternoon, at which point they adjourned for a four-day weekend, LB409.
LB409 is a bill that makes adjustments to the state aid formula, Tax Equity and educational Opportunities Act (TEEOSA), by:
- decreasing the rate at which school budgets can grow from the current level of 2.5% to 1.5% for school year 2017-2018 and 2018-2019. This change is designed to lower the amount of state aid to schools and provide property tax relief.
- Increases the local resources rate from $1.00 to $1.02030 for the same timeframe.
- Reduces Net Option Funding by 4.5%
- Lastly clarifies that Community Achievement Aid is considered as a resource when determining Transition Aid.
Senator Groene, the sponsor of the bill and the Education Committee Chair, said that the bill should increase state aid to schools by $20.8 million next year.
During debate on LB409, Senator Friesen offered AM1236 that would have repealed how Nebraska taxes multi-state income of LLCs taxed as partnerships, S corporations, and the exclusion of capital gains on the sale of employee-owned stocks by taxing such income based on federal income without allowing for adjustments. The amendment could raise around $84 million.
After lengthy debate, the Friesen amendment was not adopted by an 11-22 vote, with 14 senators present but not voting. The subsequent vote to advance LB409 from Select File was successful on a voice vote.
Friday
- the Legislature was off.
Looking Forward to Next Week
Speaker Sheer announced the schedule for next week to be:
All remaining nights, other than the last work day of the week for the legislature, are designated "late nights", nights in which the legislature may go past 7pm and as late as 11:59p.m.
Monday - May 1st
A scheduled recess day
Tuesday - May 2nd
Morning
- LB98, a bill that proposes to extend the maximum three cent levy authority for fully or over appropriated districts (NRDs), as determined by the Department of Natural Resources, from FY 2017-18 to FY 2025-26. The Levy can only be used to implement ground water management activities and integrated management activities under the Nebraska Ground Water Management and Protection Act.
No later than 10:15a.m
. - LB259A - a bill to provide funding to LB259 -
Adopt and change competency and financial ability provisions relating to court proceedings as prescribed.
Followed by LB331 (Create funds, provide for transfers, and change provisions governing funds.) and LB332 (Change Cash Reserve Fund provisions.) both budget bills that have seen some floor time already and remain on general file.
1:30p.m.
- Is time specific to LB461 (Correct references to a federal act in a revenue statute.)
LB461 contains the Governor's tax reform package, designed to provide property and income (corporate and individual) tax relief by incorporating three bills into the "package":
- LB338, introduced by Bancroft Sen. Lydia Brasch on behalf of Governor Pete Ricketts, which would change the state's method for valuing agricultural and horticultural land to an income-based approach for property tax purposes;
- LB337, introduced by Senator Smith also on behalf of the governor, would use economic growth rates to trigger income tax cuts, combines the bottom two personal tax brackets (2.46% and 3.51%) into one bracket for the lowest income earners to 3.25% by 2019; and
- LB452, introduced by Omaha Sen. Brett Lindstrom, which would change income tax rates and personal exemption amounts. Reduces the top income tax rate by approximately .1% annually starting in 2020 if revenue growth exceeds 3.5%, if growth continues to occur, then rates would go from 6.84% to 5.99% by 2027, the goal is also to lower corporate income tax rates to 5.99% over the same time frame as well.
LB461 had three contentious hours of floor debate on April 21st, as well as a "test vote" on a floor motion (MO94) offered by Senator Krist. The Krist motion was to return the bill to the Revenue Committee, as he felt that the bill was shifting to much of the tax burden from agricultural land owners to residential and commercial taxpayers and that the bill needed more finetuning before being presented to the full Legislature.
The Krist motion, aka the "test vote" failed 15-29. The significance of this is that it takes 33 to end a filibuster, which LB461 is being filibustered by opponents, and with only 29 "no" votes on the amendment to return to committee, showing support of the bill, it will be a real challenge to end the filibuster.
On the other hand, Senator Smith was quoted in the news media last week saying that, "It(LB461) will be coming back." and "I believe that I will have the votes when I'm ready for it."
I guess Tuesday we will see.
After LB461, which has another three hours of floor debate prior to taking a cloture vote, the agenda states that debate they will return to the location left off at the noon recess. Most likely, this will mean returning to the debate on the two budgets bills (LBs331 & 332), as the time allowed in the earlier portion of the agenda will not be sufficient to conclude actions on the budget bills considering all the controversy that surrounds them, especially with the new $55 million projected shortfall announced on Thursday.
Also on Tuesday's agenda is Select File debate of the second half of the Consent Calendar bills, a bill dealing with claims against the state, and a motion to pull a bill from committee (LB651 (Linehan) - Adopt the Nebraska Reading Improvement Act.), which has a one hour time limit placed upon it.
Wednesday - May 3rd
Morning
- Start off the day with LB647 and its accompanying appropriations bill, LB647A. LB647 is a bill that makes changes to judges' salaries. Given the budget issues that the state has, this bill is very contentious, in that, why should judges receive a salary increase when all other agencies are being required to take a spending cut to balance the budget?
The remainder of the day and night are allocated to continued debate on the budget in whatever stage budget bills may be.
Thursday - May 4th
Morning
- LB415 (
Provide and change notification requirements and duties and benefits for certain retirement system members, change certain annuity and disability benefit provisions, and provide duties for school districts and the Public Employees Retirement Board relating to retirement.) Is a divisive bill that has already seen some floor time and may take 33 votes to invoke cloture.
Afternoon
-Is set aside to give final round approval to bills on Final Reading.
Evening
- Is for continued debate on the budget bills. This time allotment, like all the other designated time for budget debate is needed to ensure the budget bills can be debated and passed by the Legislature on or before the 80th Legislative day, under the rules of the Legislature.
Friday - May 5th
Morning
- LB447 & LB447A (Chambers) -
Change penalty provisions relating to criminal conspiracy and certain drug-related offenses. As one might suspect, another controversial bill.
Afternoon and evening
- It being the last day of the work week for lawmakers and having potentially put in four "late nights" this week, it is the intent of the Speaker to adjourn somewhere around noon to early afternoon depending on how the debate is going in relation to LB447
