Fly on the Wall 2022: Big issues still to be decided as session winds down

It was a jam-packed week in the Legislature as lawmakers scramble to squeeze in high-profile policy changes before the session concludes. The Governor vetoed the bill to force Nebraska to apply for Emergency Rental Assistance as expected; a whopping tax relief package was revived; and the fate of a key package of criminal justice reforms aimed at reducing prison overcrowding became intertwined with that of the tax package.

The three state budget adjustment bills, LB 1011, LB 1012, and LB 1013, passed Final Reading and now await the Governor’s approval or line-item vetoes. The budget package includes funding for the proposed new lake between Lincoln and Omaha, the Platte River canal, and a new prison – all of which remained in the budget despite protests from some members. The prison funding has been “set aside” but has not yet received the final green light to begin construction on a new penitentiary. That approval will likely be granted by next year’s legislature. LB 1014, the ARPA package, was returned to Select File for a technical cleanup amendment, but will be back on Final Reading and is expected to pass soon. Also advanced was Sens. Wayne and McKinney’s North Omaha Recovery Package (LB 1024), after some tweaks to ease opposition that included an allowance for a portion of the funds to be used for affordable housing projects in Lincoln. 

Tax Relief vs. Corrections Reform

The third time was the charm this week for a massive tax cut package spearheaded by key conservatives in the body. After being defeated by opponents twice the week prior, it was attached anew to vehicle LB 873. The proposal includes cuts to the top corporate and individual income tax rates; increasing the minimum amount the state must spend on property tax relief; and an eventual total phaseout of Social Security income tax.

It’s estimated to reduce state revenues by hundreds of millions in the coming years.  Proponents say it’s the legislature’s responsibility to deliver tax relief back to Nebraskans when we have extra revenue as we do now. Opponents say committing to massive cuts now will cost the state in the long term, leaving us on the hook in future years where we’ll inevitably face lower revenues. Arguments continue to be had over whether this is an effective draw for workforce and retirees; with some saying we need to keep competitive with our neighboring states, and others saying that tax rates are not among the top factors that people consider when deciding where to live.

Opponents attempted to break the amendment containing the package up into individual pieces in an effort to stall or get some parts removed, but ultimately the entire package passed. The least popular component was the cut to the top corporate income tax rate, while the Social Security income tax exemption was more popular. This filibuster, which was defeated after several hours, was also used as a bargaining chip in the larger legislative game as leverage to try to win support for the Judiciary committee’s LB 920. That bill is a large criminal justice reform package that was informed by data from an independent study of Nebraska’s overcrowding problem. There’s a portion of the body that remains adamantly opposed to any more funding being set aside for increasing prison capacity without accompanying justice reforms to address the systemic roots of our overcrowding problem. Nebraska’s overcrowding rate is now the worst in the nation. Without sentencing and parole reforms, Judiciary Committee Chairman Lathrop and other supporters said, the state will inevitably continue spending millions to build around its ever-growing incarcerated population. In a nutshell, the changes proposed in LB 920 would better allow for low-risk, non-violent offenders to exit facilities and reintegrate into their communities under supervision more quickly if they have followed all the conditions of their sentence with good behavior; and are based on data and research about what has safely and successfully reduced overcrowding in other jurisdictions. 

Rental Assistance Vetoed, Will See Override Attempt

Governor Ricketts vetoed LB 1073, the bill to force Nebraska to accept $120 million in federal Emergency Rental Assistance funds. In a letter of explanation to senators, Ricketts cited his opposition to citizen reliance on government assistance, saying that the pandemic is essentially over and that it’s time to stop the flow of government aid to people affected by COVID. This was not unexpected. The introducer of the bill, Senator Justin Wayne, immediately filed a motion to override the veto. Since the measure passed Final Reading with 26 votes, it’s uncertain whether it will achieve the 30 votes necessary to override the governor’s veto and force the bill to be signed into law over the governor’s objections. It’s certainly possible, but not guaranteed. That debate will be held Tuesday, when several members that were previously absent or not voting could vote in support of overriding the veto. One member of the legislature is rumored to be out with a medical issue for the remainder of the session. The presence or absence of that vote could make a difference in some measures that might be close to 33 votes. 

The assistance we’d receive under LB 1073 would go directly to landlords outside Lincoln and Omaha to cover backlogs of rent owed by tenants who have struggled to pay as a result of COVID. As many of you know, agencies on the ground are still seeing very high levels of need for this aid. While the governor stated in his veto letter that an unexpended $30 million allocated to greater Nebraska indicates a lack of need, many of us have heard that this is really due to the application process – which was made intentionally difficult so as to weed out potential “fraud”. 

The deadline to apply for the full $120 million originally available has already passed at the time of this writing, but supporters are hopeful that Nebraska could still obtain a portion of the funds. Federal law requires 40% of the original $120 million to be set aside beyond the deadline, which leaves about $51 million on the table for greater Nebraska.

The Week Ahead

It’ll be another series of late nights this week.  We’ll start Tuesday by finishing up debate on the tax relief package (LB 873). It’s anyone’s guess whether weekend discussions will have yielded a compromise that will allow it all to move forward hand-in-hand with the criminal justice package (LB 920) that is also on the agenda later Tuesday. If LB 873 is challenged, LB 920 will probably face retaliation.

Tuesday will also see debate on the motion to override the governor’s veto of Emergency Rental Assistance (LB 1073) and Sen. Erdman’s priority bill (LR264CA) which proposes to the voters of Nebraska a constitutional amendment that would replace our “three-legged” tax system of income, property, and sales taxes with one “consumption tax” on all goods and services. This is one that nonprofits concerned with income inequality and issues around poverty might want to tune into, as analysis shows that a consumption tax would be regressive, meaning it would have a more negative impact on lower-income Nebraskans. 

Wednesday will be LB 933, Sen. Albrecht’s abortion ban, which is certain to be filibustered on General File. If opponents are able to hold it off for now, we’re likely to see this come up again soon if the governor calls the body into a special session to address it as expected.

Thursday and Friday the body will continue working through priority bills that sit on General and Select File. Friday’s the last day for General File debate, and Monday April 11th is the last Select File day.

This means LB 121, Sen. Hunt’s bill to lift the lifetime ban on SNAP for people with certain drug convictions, could come up on Thursday, Friday, or next Monday at the latest. We’ve not heard confirmation from the Speaker on when it will be and it’s likely contingent on how quickly the body moves through the early part of this week. Finally, if any line-item vetoes on the budget come back from the Governor, we could see override motions on those as well.

As of Tuesday, 8 legislative days remain. 

Until Next Week,

Your Capitol Fly on the Wall