Spending and Taxation Week
The past week, full of long debates over measures related to taxation and state spending, left Senators and staff very ready for a long weekend, with the Arbor Day state holiday on Friday and a recess day on Monday.
To start the week, Senators approved some more low-profile taxation measures, including a tax incentive for companies that build nuclear reactors (LB 84), updates to the state’s small business tax credit (LB 366), tax exemptions for ethanol producers (LB 595) and an elimination of the current sales tax on home water service (LB 26). Some members that have criticized other types of corporate tax incentives praised the elimination of the sales tax on water as a form of tax relief that will help Nebraskans across the board.
A phase out of Social Security income tax (LB 64) was approved after some debate, in which opponents argued that its impact could disproportionately benefit retirees with higher incomes or that it could have a negative impact on state revenue, while supporters said that it would offer some benefit to most retirees regardless of income, and that it would incentivize seniors to stay in Nebraska.
LB 396, Farm-to-School Bill Passes
Senator Brandt’s Priority Bill, LB 396, passed handily onto Select File. Called the Farm-to-School Program Act, it would encourage schools to incorporate more locally grown foods in the meals they serve to students. If it is signed into law, the Department of Education would hire a coordinator to oversee the program and connect school administrators and cafeteria managers with local farmers, gardeners, and livestock producers to provide foods to be used in school lunches. The program could also include hands-on learning activities like classroom gardening and composting projects, cooking lessons, and visits to nearby farms. Supporters of the bill touted it as a way to keep money spent on school food within the state, to improve student nutrition, and to lessen reliance on large, out of state producers in favor of small local ones. It passed with 43 votes.
LB 432, Revenue Committee Tax Package Overcomes Filibuster in Last Minute Compromise
Senators debated the Revenue Committee’s priority bill, LB 432, over two days, with opponents attempting a filibuster for some hours before a compromise was reached, allowing it to come to a vote and advance to the next round. The package contained wide ranging provisions and is a “Christmas tree” bill, or a committee bill used as a vehicle upon which pieces of several other bills were attached. The most discussed components included a controversial corporate income tax cut, which supporters say will make Nebraska more competitive in business; and a tax credit for parents of a stillborn child. While both components ultimately passed, opponents took time to debate the corporate tax cut, saying that we should not be giving corporate handouts while we struggle to achieve property tax relief or to fund schools and other services; and some vocally opposed the stillborn tax credit based on concerns that it had implications relating to abortion and “personhood”, or that a better investment would be to support pregnant women, mothers and children through healthcare and prenatal services.
LB 364, Private School Scholarship Tax Credits, Defeated by Filibuster
Senator Linehan’s priority bill, the “Opportunity Scholarships Act”, is a bill that would provide dollar-for-dollar tax credits for donors to organizations that provide education scholarships for students to attend private or parochial schools. It faced an uphill battle as it was filibustered by a coalition of mostly Democratic members and a handful of moderate Republicans. In what this Fly perceived to be one of the most tense debates yet this session, proponents posited that the Act would allow students whose local public schools are inadequate, or those who have special needs that are not being met in their public schools, to attend private or denominational schools through scholarships that their families may not otherwise be able to afford. Opponents said the bill undermines support for public schools, that the state should pour more funding into public schools and problem-solve how to help them better serve all students rather than subsidize private institutions, and that the measure could be seen as a tax break for wealthy donors who already have the ability make such donations. Opponents managed to debate the bill for 8 hours, at which point the measure failed on a cloture vote with only 29 of the 33 votes required. Sen. Linehan has brought this for several years, and we can expect to see it come back next year.
Governor signs budget with no vetoes
The governor issued no vetoes on the $9.7 billion, two-year state budget package, which he praised for controlling state spending and significantly increasing direct property tax relief, while urging lawmakers to continue to push for additional tax relief.
Revenue Forecast Drops Considerably
The Nebraska Economic Forecasting Advisory Board, or the “forecasting board” for short, met on Thursday to update its projections for General Fund tax receipts for the next 3 fiscal years. The board concluded that we will have a net increase of about $40 million over what was previously projected over the next 3 years. These estimations by the board will be used by the legislature as Senators assess upcoming budgets.
Other Bills Advanced
- LB 108, Senator McCollister’s bill to mitigate the “cliff effect” in SNAP food assistance by increasing the income eligibility limit. Supporters were somewhat surprised when this bill passed comfortably through the second round with little opposition. Negotiations included an amendment to “sunset” the change, or set an end date on it for 2023, when it will be reassessed; and an amendment to require DHHS to refer eligible SNAP participants to a job training program administered to the Department of Labor. These changes appeased enough Republicans who had opposed or been on the fence about the bill previously.
- LB 185 (Brewer) provides funding to a tribal health center.
- LB 388 (Friesen) expands broadband internet access in underserved areas.
- LB 306 (Brandt) expands eligibility for LIHEAP, or energy assistance.
- LB 327 (McKinney) requires financial literacy education in schools.
- LB 354 (Pansing Brooks) ensures legal counsel for juveniles facing criminal charges.
Back Door Deals Brewing?
In a bit of speculation, this Fly notes that from rumblings among staff and senators, there is a substantial amount of “back door deals” being attempted. My sense is that some have been successful. This is usually in the form of “vote trading”, which some view as a “sneaky” move; while others view it as simply part of the political game. In a vote trade, a senator will promise his or her vote on another’s bill they may not have normally supported in exchange for the other’s support on one of their bills in what should be a mutually beneficial transaction. There is a sense that this is causing a level of tension between some members, but others take it in stride as nothing personal. I will say that this has likely played a role in some of the high-profile measures that passed (or didn’t pass) unexpectedly in this past week; and when you see members vocally supporting or opposing something that’s out of character for what you’d expect from them, you might wonder if they’ve made some kind of a deal to achieve their goals.
The Speaker announced on Thursday that next week we will continue to work off the list of taxation and spending bills we shared last week, adding to the list the following three bills on General File:
LR 11CA (Erdman) Constitutional amendment to require enactment of a consumption tax and prohibit certain other forms of taxation (anticipated debate on Wednesday).
LB 241 (Vargas) Adopt the Meatpacking Employees COVID-19 Protection Act (anticipated debate on Thursday).
LB 496 (Hilkemann) Require collection of DNA samples for persons arrested for crimes of violence.
And the anticipated scheduling as follows:
- Tuesday – Consent Calendar, Friesen LB 454 – adopt the School Property Tax Stabilization Act and change the valuation of agricultural land.
The primary focus will continue to be getting through priority bills on General File, with Select and Final reading bills sprinkled in as time allows.
Until next week,
Your Capitol Fly on the Wall