This week the legislature finally advanced the budget adjustment bill after a heated debate over one controversial provision regarding certain health care funding (Title X). When the legislature returns after the Easter weekend break, there are only seven more days in the 2018 session. Speaker Jim Scheer announced this morning in order to get a bill across the finish line this session, it needs to pass General File by next Friday, April 6th. The Unicameral has been working late nights to get through a very hefty agenda of bills still needing action.
Undoubtedly the most significant issue still awaiting action by Nebraska Cattlemen is the advancement of any legislation to address property tax relief. At its January board of directors meeting, Nebraska Cattlemen took positions and prioritized four key tax bills and stated the following:
Nebraska Cattlemen seek a legislative solution that yields meaningful property tax relief and reform in 2018. While no single bill introduced is a complete solution, many ideas exist in legislation introduced that could lead to broad, long-term tax relief that begins immediately. Agricultural property owners pay a disproportionate share of Nebraska’s total property tax liability. Tax reform should reduce that burden and will require a long-term strategy that may include:
- Increasing and protecting the Property Tax Credit Fund and only repurposing it if additional relief is passed in addition to the current level ($224 million);
- Modifications to school funding that reduces the reliance on property tax dollars locally and increases overall state dollars for K-12 education while still ensuring a high-quality education for all Nebraska students;
- Implementing a refundable tax credit based on the amount of property taxes paid;
- Shifting the current tax burden or modifying/increasing existing revenues to bring dollar for dollar property tax reductions;
- Lowering and/or capping increases of agricultural land valuations of real property;
- Spending restraints and prudent financial management at all levels of government; and
- Defeating efforts that further burden property tax payers in Nebraska.
Two key bills are still alive and on General File (first round debate) and may have a chance to advance before the end of the session.
The first is LB 947 which has been on the agenda this week and will be debated next week beginning on Tuesday, April 3rd. LB 947 was introduced by Senator Jim Smith (Papillion) on behalf of Governor Ricketts. It advanced from the Revenue committee on a 5-3 vote on March 21st. The bill has been drastically amended since introduction and seeks to make a number of changes.
- Maintain the current property tax credit fund and its current distribution ($224 million of which agriculture land receives about $105 million).
- A new refundable income tax credit (RITC) would be created for both agriculture and residential property. The agriculture land credit starts at 2% in 2018 and grows 2% per year until it reaches 20% in the year 2027. The residential credit begins at 1% in 2018 and grows 1% per year until 2024 and then grows 2% per year until it reaches 20% in 2030. The residential credit is capped at $25 in year one and grows proportionally as the credit grows.
- The corporate income tax rate is reduced from 7.81% in 2018 to 7.32% in 2019 to 6.84% in 2020. At that point, the top corporate rate will match the top individual income tax rate.
- $5 million will be transferred annually from the state’s cash reserve fund to the Job Training Cash Fund for workforce development.
At its January board of directors meeting, Nebraska Cattlemen took a position to monitor LB 947 as introduced and affirmed that position on the amended version. NC has broad tax policy on many sides of the bill which led to the monitor position. Maintaining the property tax credit fund is very important, but there is some concern with looking to future growth of state tax receipts to provide tax relief, and full implementation of the bill would come at 2027 for agricultural property owners at the earliest.
The other bill advanced from the Education committee on a 6-1 vote on March 27th is LB 1103. LB 1103 was introduced by Senator Curt Friesen (Henderson), and is supported by NC. With the number of school not receiving state equalization dollars increasing each year, Nebraska Cattlemen has long supported legislation that would more equitably distribute dollars for all schools. LB 1103 provides for state aid to cover 25% of basic needs (foundation aid) under the Tax Equity and Education Opportunity Support Act (TEEOSA) formula. Senator Friesen and others are working to put together a package of funding to pay for this adjustment. The bill has not yet been scheduled for General File.
The days will be long next week as the legislature works through the final bills and issues of the 2018 session. Nebraska Cattlemen has been very engaged this session working on behalf of Nebraska’s cattle producers.