April 1, 2022

2022 SESSION, 107TH LEGISLATURE

During the past week, the Legislature adopted adjustments to its biennium budget, moved to the cusp of giving final approval to the ARPA funding proposal, moved forward on “transformative” tax relief and engaged in extensive debate on prison reform and overcrowding measures. In its spare time, the Legislature methodically moved through a series of priority of bills at the General File and Select File stages of debate but has yet to address almost 30 individual Senator, Committee and Speaker priority bills. In order for a bill to be passed this session, it must advance from General File to Select File no later than Friday, April 8.

Rural Workforce Housing Bill Moves On

The Legislature has given first-round approval to LB 1069, a bill introduced and prioritized by Senator Matt Williams (Gothenburg), on behalf of the NBA, which would: a) extend the definition of workforce housing to include owner-occupied housing units that cost not more than $325,000 (currently $275,000) and rental housing units that cost not more than $250,000 (currently $200,000); b) replace the $2 million cumulative grant limitation with provisions allowing for the Department, in its discretion, to determine the cumulative amount of grants for any single grantee; c) reduce the matching requirement for grants from 100% to 50%; and d) extend the sunset date for provisions of the Act from July 1, 2022, to July 1, 2027.

LB 1069 is back on the agenda for Select File debate next Tuesday.

Omnibus Banking Bill Advances to Final Reading

The Legislature has advanced LB 707 to the final stage of debate. The bill, introduced by Senator Williams, has been designated as a Committee Priority bill and, as originally introduced, would authorize the Department of Banking to examine bank subsidiaries and recognize that bank subsidiaries may be formed as a limited liability company. The bill would also adopt the annual state-chartered bank and savings and loan “wildcard.”

As advanced to Final Reading, the bill contains the following provisions, all of which are supported by the NBA:

LB 706 - REAL PROPERTY APPRAISER ACT: Introduced by Senator Williams, LB 706 would make "technical corrections" to the existing Real Property Appraiser Act to remain in compliance with the Appraiser Qualification Board's Real Property Appraiser Qualification Criteria and to maintain compliance with Title XI of the federal Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

LB 738 - LIBOR TRANSITION: Introduced by Senator Eliot Bostar (Lincoln), LB 738 addresses the legal effects of the discontinuance of LIBOR on contracts, securities or instruments and provides for the replacement, by operation of law, of the United States Dollar Libor as the benchmark index for any contract, security or instrument, with a recommended benchmark replacement that is based off a Secured Overnight Financing Rate (SOFR).

The bill specifies that the benchmark replacement applies with respect to a contract, security or instrument that either: 1) contains no fallback provisions setting forth a methodology or procedure for determining a benchmark replacement; or 2) contains fallback provisions that result in a benchmark replacement that: a) is not a recommended benchmark replacement; and b) is based in any way on any LIBOR value.

The measure provides that the selection or use of a recommended benchmark replacement as a benchmark replacement for a contract, security or instrument: 1) constitutes a reasonable replacement for and a commercially substantial equivalent LIBOR and 2) does not: a) impair or affect certain rights and performance obligations under; b) constitute a breach of; or c) void or nullify; the contract, security or instrument. The bill further provides that a person is not liable for damages and is not subject to any claim for equitable relief, in connection with: 1) the selection or use of a recommended benchmark replacement; or 2) the determination, implementation or performance of benchmark replacement performing changes; with respect to any contract, security or instrument.

LB 826 - PUBLIC FUNDS DEPOSIT SECURITY ACT: Senator Brett Lindstrom (Omaha) is the sponsor of LB 826, which would authorize the use of bonds or obligations of another state, or a political subdivision of another state, which are rated within the two highest classifications by at least one of the standard credit rating services to be used as collateral for public funds, with such classifications to include the underlying credit rating or enhanced credit rating, whichever is higher, with respect to bonds or obligations of a political subdivision of another state.

LB 846 - BANK DIRECTORS ANNUAL AUDIT: Introduced by Senator Julie Slama (Sterling), LB 846 would allow a bank’s board of directors to submit its annual audit to the Department of Banking within 120 days after the completion of the audit or, for a periodic audit, within 120 days after the end of the calendar year.

LB 993 - NEBRASKA FINANCIAL INNOVATION ACT: Senator Bostar is also the sponsor of legislation (LB 993) which would prohibit a digital asset depository from providing digital asset and cryptocurrency custody services unless the digital asset or cryptocurrency was 1) initially offered for public trade more than six months prior to the date of the custody services or 2) was created or issued by any bank, savings bank, savings and loan association, or building and loan association organized under the laws of this state or organized under the laws of the United States to do business in this State.

Prior to advancing, Senator Mike Flood (Norfolk) proposed an amendment to LB 707 to clarify the reserve requirements applicable to digital asset depositories which take custody of digital assets. The amendment clarifies that the 100% reserve requirement for digital asset depositories only applies to the value of any outstanding stablecoin issued by the digital asset depository. Without this amendment, the 100% reserve requirement would apply to all digital assets in the custody of the digital asset depository.

Game-Changing Tax Relief Advances

After a number of unsuccessful attempts to forge a compromise on a package of tax relief measures, the Legislature, following four hours of debate, on a vote of 44-0 gave first-round approval on Wednesday to LB 873.

LB 873 contains the following provisions:

• Reduces individual and corporate income maximum rates to 5.84% over the next five years
• Provides additional property tax relief for the portion of real estate taxes paid for community colleges, with initial funding for property tax credits in the amount of $50 million in 2022, increasing to $195 million by 2026, with the credit percentage to be adjusted going forward on the basis of credits allowed in the prior year increased by the allowable growth percentage of no more than 5%
• Increases the amount of credits available under the Property Tax Incentive Act to $548 million in 2022, $567 million in 2023, and eliminates the existing cap of $375 million, otherwise applicable in 2022
• Completely phases out income taxes on social security income

LB 873 has resurfaced on the agenda for Select File debate next Tuesday.

Other Bills of Interest

LB 902 - NEBRASKA CAREER SCHOLARSHIP ACT: LB 902, introduced by Senator Ray Aguilar (Grand Island) and designated as a Speaker Priority bill, has been advanced to Select File. LB 902 would authorize the board of trustees of the Nebraska State Colleges to award a Nebraska Career Scholarship not exceeding a maximum of $15,000 per year to any eligible state college student who achieved a composite score on a standard college admission test equivalent to a score of at least 18 out of a maximum score of 36 and who is enrolled in an eligible program of study (rangeland management, industrial technology, criminal justice, business administration, education, communication, or computer information systems). Under the measure each scholarship recipient would be required to register to obtain a Nebraska-based internship, apprenticeship, clinical position or employment in a major-related field prior to completion of the student’s eligible program of study. The bill also provides similar scholarship and internship opportunities for University of Nebraska eligible students. (NBA Position: Support)

LR 264CA-NEBRASKA CONSUMPTION TAX ACT: The Legislature is scheduled to conduct General File debate next Tuesday on LR 264CA, a proposed constitutional amendment, introduced and prioritized by Senator Steve Erdman (Bayard). The measure, on and after January 1, 2024, would prohibit the imposition of any taxes other than retail consumption taxes and excise taxes upon the people of Nebraska. If passed by the Legislature and approved by the voters, the state income tax, state sales tax, property tax and the inheritance tax would be repealed. (NBA Position-Oppose)

Budget Package Approved

A package of budget adjustment bills (LB 1011, LB 1012 and LBA 1013) received final-round approval on Tuesday and have been sent to Governor Ricketts for his signature. The $9.8 billion biennium state budget contains $30 million for rural workforce housing (LB 1071) and $20 million for middle-income workforce housing (LB 1262), both of which are supported by the NBA.

ARPA Funding Awaits Final Approval

LB 1014, which would distribute just over $1 billion in ARPA funds for approximately 40 projects or focus areas, has been re-advanced to Final Reading. The legislation contains $10 million for rural workforce housing "infrastructure" (laying drinking water transmission lines, rehabilitation, renovation, demolition or destruction of vacant or abandoned buildings in disproportionately impacted communities and removal and remediation of environmental contaminants for hazards from vacant or abandoned properties in disproportionately impacted communities).

Under LB 1014, ARPA funding would be provided to address the following project areas:

Public Health:
$60 million for a rural health complex at the University of Nebraska-Kearney; $20 million to help rural communities replace aging ambulances

Economic Revival:
$60 million to Nebraska’s six community colleges to strengthen and grow a post-pandemic skilled workforce;
$20 million for grants to Nebraska food banks and to groups with innovative food supply chain projects

Premium Pay:
Nearly $37 million to provide pay increases for front-line public health and public safety workers in 24-hour facilities; $55 million for rate increases for certain providers of developmental disabilities services

Infrastructure:
​$23 million to repair irrigation tunnels that collapsed in the Fort Laramie–Gering Irrigation District; $20 million to the Nebraska State Fair for wastewater and sewage systems