​2023 SESSION, 108TH LEGISLATURE

Governor Jim Pillen outlined his priorities for the 2023 Legislative Session in his State of the State Address presented on Wednesday, January 25. The Governor has proposed an austere budget providing for a 1.3% annual average increase in state General Fund spending during the two-year period ending June 30, 2025.

Citing the unprecedented $2.5 billion cash reserve expected to exist by fiscal year 2025 based on the latest revenue projections, the Governor has proposed significant tax cuts and additional state funding for K–12 education. In addition, he has proposed setting aside funds for a new state prison, to build the Perkins County canal and increase funding for building state roads.

With regard to state funding for education, the Governor has proposed to create a new Education Future Fund which will require an initial investment of $1 billion and $250 million in additional funding each year thereafter. The increased state aid to schools would be coupled with a 3% cap on school district property tax revenue growth. The Education Future Fund would also be used, to provide $1,500 per student for all schools in the state and to increase special education funding in the future. On the tax relief side, Governor Pillen is asking for maximum individual and corporate income tax rates to be reduced to 3.99% by 2027 and to accelerate the elimination of income taxes on Social Security.

The following bills on the NBA Affirmative Legislature agenda were heard by the Banking, Commerce and Insurance Committee during the past week:

LB 94 - UCC Article 12
Would adopt Uniform Commercial Code, Article 12 relating to controllable electronic records.

LB 207 - Trust Deeds - Location of Trustee's Sale
Would clarify that the sale of property pursuant to a power of sale under a trust deed may be conducted on the premises, at the county courthouse, or in any public building in which county offices are located within the county in which the property to be sold is situated.

LB 279 - Executive Officer Reporting Requirements
Would eliminate the requirement for executive officers to make annual reports regarding the amount of loans or indebtedness on which he or she is a borrower, cosigner, or guarantor, the security therefor, and the purpose for which the proceeds have been or are to be used.

In response to concerns expressed by the Nebraska Department of Banking and Finance, an amendment was agreed to by the NBA and adopted by the Committee to allow the Board of Directors to retain the flexibility to obtain a credit report for its executive officers on an annual basis.

Each of the bills listed above were advanced from Committee by unanimous vote and will be ready to be acted upon when the Legislature commences floor debate on February 13.

A number of bills affecting the banking industry will be heard before various Committees in the upcoming week, including the following:

BUSINESS AND LABOR COMMITTEE - January 30

LB 57 - Paid Family and Medical Leave Insurance Act
Introduced by Senator Machaela Cavanaugh (Omaha), LB 57 would establish, as of January 1, 2025, a statewide paid family medical leave insurance program, managed by the state Department of Labor. The bill would apply to all employers subject to the Employment Security Act (one or more employees), with self-employed individuals eligible to participate. Employees would be eligible for 12 weeks for 60 workdays of paid leave if taken intermittently. Benefits would be based upon 90 percent of an individual's average weekly wage that is at or below 50 percent of the state average weekly wage and 50 percent of the individual's average weekly wage that is above 50 percent of the state average weekly wage. Benefits would be financed through employer contributions. (NBA Position: Oppose)

LB 249 - Rural Workforce Housing Investment Act
Introduced by Senator Tom Briese (Albion), LB 249 would expand the definition of workforce housing to include housing that does not receive federal or state low income housing tax credits, community development block grants, home funds, funds from the National Housing Trust Fund, or funds from the Affordable Housing Trust Fund, thereby allowing for the use of such funds, together with Rural Workforce Housing Investment Funds. The bill would also allow a nonprofit development organization to apply for more than one grant subject to a limitation on the maximum amount of grant funds awarded to such nonprofit development organization over a two-year period to no more than $5 million. (NBA Position: Oppose)

AGRICULTURE COMMITTEE - January 30

LB 264 - Grain Dealer Act / Grain Warehouse Act
The Agriculture Committee introduced a measure (LB 264) which would require bonds held by grain dealers to be a minimum amount of $35,000 and not more than $1 million (the maximum was previously $300,000) and bonds held by grain warehouses to be in a minimum amount of $25,000 and not more than $1 million (the maximum was previously $500,000).  (NBA Position: Support)

BANKING, COMMERCE AND INSURANCE COMMITTEE - January 30

LB 67 - Public Funds
Introduced by Senator Julie Slama (Lincoln), LB 67 would require the state treasurer to ensure that money deposited by the state treasurer’s office is not used by financial institutions for social or political causes or objectives. (NBA Position: Watch and Seek Amendments)

LB 589 - School District Property Tax Limitation Act
Senator Briese has also introduced LB 589 which would prohibit a school district from making a property tax request for any year in excess of 3% more than its property tax request in the prior year, or the percentage increase in the Consumer Price Index except with approval of the majority of its school board or by a 60% majority of the registered voters in a Primary, General or Special Election. (NBA Position: Support)

LB 669 - Department of Banking Conditional Orders
Introduced by Senator Beau Ballard (Lincoln) LB 669 would authorize the director of the Department of Banking to prescribe conditions for banks, trust companies, credit unions, building and loan associations, savings and loan associations, digital asset depositories, and their holding companies, if any, as part of any written order, decision, or determination required to be made pursuant to the Nebraska Banking Act, Chapter 8, Article 3, the Credit Union Act, and the Nebraska Financial Innovation Act. (NBA Position: Support)

LB 674 - Nebraska Financial Innovation Act
Introduced by Senator Mike Jacobson (North Platte), LB 674 would make technical corrections to the Nebraska Financial Innovation Act regarding digital asset depositories. (NBA Position: Support)

REVENUE COMMITTEE - February 2

LB 754 - Taxation - Individual and Corporate Income Tax Reductions
Senator Linehan has introduced legislation that would reduce the maximum individual income tax rate from 6.84% to 3.99% and also reduce the maximum corporate income tax rate from 7.25% to 3.99% over the next five years. (NBA Position: Support)

LB 804 - Taxation - Individual and Corporate Income Tax Reductions
Senator Brad von Gillern (Omaha) is the sponsor of LB 804 which would reduce the maximum corporate income tax rate from 7.25% to 5.84% and would decrease the maximum individual income tax rate from 6.84% to 5.84% on January 1, 2023. (NBA Position: Support)

LB 806 - Taxation - Individual Income Tax Reductions
Senator von Gillern (Omaha) has also introduced LB 806 which would reduce the maximum individual income tax rate from 6.84% to 5.84% on January 1, 2023. (NBA Position: Support)

REVENUE COMMITTEE - February 3

LB 641 - Taxation - Social Security Benefits
Introduced by Senator Kathleen Kauth (Omaha) LB 641 would exclude 70% of Social Security benefits included in federal adjusted gross income from state taxation beginning January 1, 2023, and 100% of such benefits beginning January 1, 2024. (NBA Position: Support)

​2023 SESSION, 108TH LEGISLATURE

As the curtain closed on the time allowed for new bill introductions on Wednesday, a total of 812 bills and 17 proposed constitutional amendments had been introduced. The Legislature adopted a modest slate of non-controversial amendments to the rules that will govern the legislative activities for the balance of the session, avoiding extensive debate as contentious issues such as secret ballots for election of Committee chairs and revisions to the filibuster rules were not advanced by the Rules Committee for consideration by the full Legislature.

Committee hearings will begin on Monday, with Speaker of the Legislature John Arch (La Vista), having announced that committee hearings will be held in both the mornings and afternoons from January 30 through February 7. As a result, floor debate on bills advancing from Committee may not occur until February 10.

Tax Relief Measures
​Calling his tax relief plan “the largest tax cuts in the history of Nebraska,” Governor Jim Pillen has proposed a series of measures that would provide $78 million in income tax reductions yet this year and more than $720 million by 2027. The tax relief measures would slash maximum individual and corporate tax rates to 3.99% by 2027. In addition, elimination of income taxation of social security benefits would be completed by 2024. Another measure would change the way agricultural and horticultural land is valued in Nebraska for tax purposes by basing the valuation on productivity and income potential.

Education Reform Measures
Governor Pillen has also proposed sweeping changes to the manner in which state funds are used for public education. The legislative package would provide school districts with $1,500 for every student enrolled, increase special education funding and establish a special fund to ensure the sustainability of these programs. An Education Future Fund will appropriate $1 billion in fiscal year 2023-24 and $250 million in each of the following six years to fund the increase in state funding of public schools. In addition, the total amount in additional property taxes that could be requested by schools would be limited to 3% based on their total revenue, with additional flexibility provided based on a school’s needs.

On Monday, January 23, the following NBA Affirmative Legislative bills will be heard by the Banking, Commerce and Insurance Committee:

LB 94 - UCC Article 12 - Cross Collateralization
Introduced by Senator Julie Slama (Dunbar), LB 94 would adopt Uniform Commercial Code, Article 12, relating to controllable electronic records.

LB 207 - Trust Deeds - Location of Trustee's Sale
Senator Brad von Gillern (Elkhorn) has introduced LB 207, which would clarify that the sale of property pursuant to a power of sale under a trust deed may be conducted on the premises, at the county courthouse, or in any public building in which county offices are located within the county in which the property to be sold is situated.

LB 279 - Executive Officers' Reporting Requirements
Introduced by Senator Kathleen Kauth (Omaha), LB 279 would eliminate the requirement for executive officers to make annual reports regarding the amount of loans or indebtedness on which he or she is a borrower, cosigner, or guarantor, the security therefor, and the purpose for which the proceeds have been or are to be used.

A number of other bills affecting the banking industry have also been introduced during the 10 days of the 2023 legislative session, including the following: 

LB 476 - Public Entities Investment Trust Act
Introduced by Senator Justin Wayne (Omaha), LB 476 would authorize the creation of trusts to provide an investment pool into which all public entities (excluding the state of Nebraska and any agency thereof) may deposit funds.

LB 483 - Public Funds/Credit Unions
Introduced by Senator Jane Raybould (Lincoln), LB 483 would authorize a state or federal credit union to hold public deposits of the state or any political subdivision of the state.

LB 496 - Sales Tax Exemption - Business Inputs
Senator Lou Ann Linehan (Omaha) is the sponsor of legislation (LB 496) which would exempt the sale, lease, or rental of and the storage, use, or other consumption of business inputs (a product or service that (a) is purchased by a business entity from a retailer; and (b) is used by the business entity, in the regular course of its business, in a way that is directly related to the production of a product or the provision of a service). In order for a product or service to be considered a business input (a) the business entity must pass on the cost of such product or service to the entity’s customer; and (b) the business entities customer can reasonably be considered as the ultimate consumer of such product or service.

LB 497 - Itemized Deductions
Senator Linehan has also introduced LB 497 which would, effective January 1, 2023, allow every individual who itemizes deductions on their federal return to subtract from federal adjusted gross income, the greater of either the standard deduction; or the sum of a) federal itemized deductions except for the amount for state or local income taxes included in federal itemized deductions before any federal disallowance; and b) the total amount of state and local property taxes reported on the federal return before any federal disallowance, less the amount of state and local property taxes actually included in federal itemized deductions. 

LB 504 - Rural Workforce Housing Investment Fund Appropriations
Introduced by Senator Ray Aguilar (Grand Island), LB 504 would also transfer $25 million in fiscal year 2023-24 and fiscal year 2024-25 to the Rural Workforce Housing Investment Fund. Would also transfer $25 million dollars for fiscal year 2023-24 and fiscal year 2024-25 to the Affordable Housing Trust Fund.

LB 641 - Taxation - Social Security Benefits
Introduced by Senator Kathleen Kauth (Omaha) LB 641 would exclude 70% of Social Security benefits included in federal adjusted gross income from state taxation beginning January 1, 2023, and 100% of such benefits beginning January 1, 2024.
 
LB 669 - Department of Banking Conditional Orders
Introduced by Senator Beau Ballard (Lincoln), LB 669 would authorize the director of the Department of Banking to prescribe conditions on banks, trust companies, credit unions, building and loan associations, savings and loan associations, and digital asset depositories, and their holding companies, if any, as part of any written order, decision, or determination required to be made pursuant to the Nebraska Banking Act, Chapter 8, Article 3, the Credit Union Act, and the Nebraska Financial Innovation Act.

LB 674 - Nebraska Financial Innovation Act
Introduced by Senator Mike Jacobson (North Platte), LB 674 would make technical corrections to the Nebraska Financial Innovation Act regarding digital asset depositories.

LB 710 - Credit Union Act
Introduced by Senator George Dungan (Lincoln), LB 710 would eliminate requirements for the Director of Banking to provide notices of an application for establishment of a branch of a credit union and remove discretion from the Director to hold a public hearing on amendments to the Credit Unions Association’s bylaws which are brought before the Department. The bill would also allow a credit union with a main chartered office approved branch in the state, upon notification to the Department, to establish savings account programs in any elementary or secondary school, whether public or private, that has students who reside in the same city or village as the main chartered office or branch of the credit union, or, if the main office of the credit union is located in an unincorporated area of the county, at any school that have students who reside in the same unincorporated area. The legislation would expand the field of membership of a credit union to include persons or organizations within a geographically defined community, neighborhood, or rural district; authorize a credit union to conduct annual or special meetings by virtual conferencing platform; and authorize credit unions to invest in shares, stocks, or member units of financial technology companies in a total amount not exceeding 5% of the net worth of the credit union.

LB 730 - Fair Access to Financial Services Act
Introduced by Senator Rick Holdcroft (Bellevue) LB 730 would restrict financial institutions (banks, savings and loans, trust companies, credit unions, money transmitters, non-depository service providers and insurance companies) from limiting access to financial services (financial product or service) for any reason other than objective financial criteria. The bill would prohibit a financial institution from a) denying any person a financial service offered by the financial institution unless justified by such person’s documented failure to meet quantitative, impartial, and risk-based financial standards established in advance by the financial institution; and b) denying any person a financial service offered by the financial institution when the effect of the denial is to prevent, limit, or otherwise disadvantage the person 1) from entering or competing in a market or business segment; or 2) in such a way that benefits another person or business activity in which the financial institution has a financial interest or 3) deny, in coordination with another person, any person a financial service the financial institution offers.

LB 743 - Investment Neutrality in Public Funds Act
Introduced by Senator Kathleen Kauth (Omaha) would require any investment manager, fiduciary, governing body or financial institution in making and supervising investments of any public fund to discharge its duties solely in the financial interest of the beneficiaries for the exclusive purposes of a) providing financial benefit to the beneficiaries and b) defraying reasonable expenses related to administration of the benefits. The bill would require a fiduciary to take into account only financial (having a material effect on the financial risk of the financial return of an investment) factors when discharging its duties with respect to investments of public funds (financial does not include any action taken, or factor considered, by a fiduciary with any purpose whatsoever to further social, political, or ideological interests). The bill would deem a fiduciary to have taken an action, or consider the factor, with a purpose to further social, political, or ideological interests based upon evidence indicating such a purpose any of the following: 1) eliminating, reducing, offsetting, or disclosing greenhouse gas emissions; 2) instituting or assessing corporate board, or employment, composition, compensation, or disclosure criteria that incorporates characteristics protected in the state under the Nebraska Fair Employment Practices Act; 3) divesting from, limiting investment in, or limiting the activities or investments, any company, for failing, or not committing, to meet environmental standards or disclosures; 4) access to abortion, sex or gender change, or transgender surgery; or 5) divesting from, limiting investment in, or limiting the activities or investments of, any company, for engaging in, facilitating, or supporting the manufacture, distribution, sale, or use of firearms.

LB 754 - Taxation - Individual and Corporate Income Tax Reductions
Senator Linehan has introduced legislation that would reduce the maximum individual income tax rate from 6.84% to 3.99% and also reduce the maximum corporate income tax rate from 7.25% to 3.99% over the next five years.

LB 804 – Taxation - Individual and Corporate Income Tax Reductions
Senator Brad von Gillern (Omaha) is the sponsor of LB 804 which would reduce the maximum corporate income tax rate from 7.25% to 5.84% and would decrease the maximum individual income tax rate from 6.84% to 5.84% on January 1, 2023. Would increase the amount of approved projects under the Nebraska Advantage Rural Development Act from $1 million-$10 million beginning calendar year 2023 in each calendar year thereafter.

LB 806 - Taxation - Individual Income Tax Reduction
Senator von Gillern (Omaha) has also introduced LB 806 which would reduce the maximum individual income tax rate from 6.84% to 5.84% on January 1, 2023.

You are encouraged to sign up for the annual NBA State Government Relations Forum which will be held on Thursday, January 26, at the Cornhusker Marriott Hotel in Lincoln, with registration beginning at 11:00 a.m.

A legislative briefing will be provided by NBA General Counsel Bob Hallstrom. Director of the Nebraska Department of Banking & Finance Kelly Lammers and Attorney General Mike Hilgers will make presentations at the Forum, along with a senator panel consisting of Senators Mike Jacobson and Rob Clements.

The State Government Relations Forum presents an opportunity to meet personally with your state senator and to discuss issues of importance to the banking industry and to your institution and community. We look forward to seeing you on January 26!
Register

As of Friday, January 13, the eighth day of the 2023 Legislative Session, a total of 464 bills and 15 proposed constitutional amendments have been introduced. With two days left for bill introductions, the total number of bills this session is expected to rival the number introduced in recent years.

The final Committee on Committees Report regarding the assignment of senators to standing committees was approved on Monday, following eight hours of floor debate. Committee hearings will commence on January 23.

The Legislature's Rules Committee conducted a public hearing on Thursday on nearly 60 proposed changes to the rules governing the legislative process. The Legislature is expected to begin floor debate next Thursday on proposed rules advanced by the Committee.

A number of bills authorized for introduction on behalf of the NBA by the Government Relations Committee and Board of Directors were introduced during the past week. The following are among the bills on the NBA Affirmative Legislative agenda:

LB 69 - Life Insurance Assignment - Notice of Lapse/Termination
Senator Mike Jacobson (North Platte) introduced LB 69 on behalf of the NBA. LB 69 would prohibit a policy of life insurance subject to an assignment from being terminated or lapsed by reason of default in payment of any premium unless a notice of pending lapse and termination of the policy has been provided by the insurer to any known assignee at least 30 days prior to the effective date of the lapse and termination. The bill also authorizes senior citizens to designate a third party to receive notices of cancellation, nonrenewal, and conditional renewal of a life insurance policy.

LB 94 - UCC Article 12 - Cross Collateralization
Introduced by Senator Julie Slama (Dunbar), LB 94 would adopt Uniform Commercial Code, Article 12, relating to controllable electronic records.

LB 207 - Trust Deeds - Location of Trustee's Sale
Senator Brad von Gillern (Elkhorn) has introduced LB 207, which would clarify that the sale of property pursuant to a power of sale under a trust deed may be conducted on the premises, at the county courthouse, or in any public building in which county offices are located within the county in which the property to be sold is situated.

​LB 279 - Executive Officers' Reporting Requirements
Introduced by Senator Kathleen Kauth (Omaha), LB 279 would eliminate the requirement for executive officers to make annual reports regarding the amount of loans or indebtedness on which he or she is a borrower, cosigner, or guarantor, the security therefore, and the purpose for which the proceeds have been or are to be used.

LB 330 - Small Estate Affidavit - Endorsement of Checks
Senator Wendy DeBoer (Bennington) has introduced LB 330 which would change provisions relating to small estate affidavits and the negotiation of checks made payable "to the estate of" by authorizing a financial institution to accept such a check endorsed by the successor named in a small estate affidavit. This clarification in the law will avoid the need to have a new check issued by the drawer of the check under such circumstances.

A number of other bills affecting the banking industry have also been introduced during the first seven days of the 2023 Legislative Session, including the following:

LB 67 - Public Funds
Introduced by Senator Slama, LB 67 would require the state treasurer to ensure that money deposited by the state treasurer's office is not used by financial institutions for social or political causes or objectives.

LB 79 - Taxation Consumption Tax Act
Introduced by Senator Steve Erdman (Bayard), LB 79 would eliminate all property, income and corporate taxes and replace it with a tax on the use or consumption in the state of Nebraska of taxable property or services (excludes intangible property and services) at a rate of 7.5%. The legislation would impose the consumption tax on financial intermediation services, including explicitly and implicitly charged fees for financial intermediation services to be collected with the same frequency that statements are rendered by the financial institution, but not less frequently than quarterly.

LB 213 - Rural Workforce Housing Investment Act
Introduced by Senator Slama, LB 213 would reduce the matching funds requirement under the Rural Workforce Housing Investment Act from one-half to one-quarter of the amount of workforce housing grant funds awarded in a city of the second class and village.

LB 214 - Omnibus Department of Banking Bill
Senator Slama has also introduced LB 214, which would adopt changes to federal law regarding banking and finance and change provisions relating to digital asset depositories, loan brokers, mortgage loan originators, and installment loans. The bill also contains the annual bank and savings and loan "wild-card" provision.

LB 249 - Rural Workforce Housing Investment Act
Introduced by Senator Tom Briese (Albion), LB 249 would expand the definition of workforce housing to include housing that receives federal or state low-income housing tax credits, community development block grants, home funds, funds from the National Housing Trust Fund, or funds from the Affordable Housing Trust Fund, thereby allowing for the use of such funds, together with Rural Workforce Housing Investment funds. The bill would also allow a nonprofit development organization to apply for more than one grant subject to a limitation on the maximum amount of grant funds awarded to such nonprofit development organization over a two-year period to no more than $5 million.

LB 268 - Political Subdivision Investment Pool
Introduced by Senator Steve Halloran (Hastings), LB 268 would authorize any political subdivision vested with taxing authority including quasi-public entities, joint public agencies created pursuant to the Joint Public Agency Act, and joint entities created pursuant to the Interlocal Cooperation Act located in Nebraska to participate in a trust or investment pool established by the office of the State Treasurer.

You are encouraged to sign up for the annual NBA State Government Relations Forum, which will be held on January 26 at the Cornhusker Marriott Hotel in Lincoln, with registration beginning at 11:00 a.m.

A legislative briefing will be provided by NBA General Counsel Bob Hallstrom. Director of the Nebraska Department of Banking & Finance Kelly Lammers and Attorney General Mike Hilgers will make presentations at the Forum, along with a senator panel consisting of Senators Mike Jacobson and Rob Clements.

The State Government Relations Forum presents you with an opportunity to meet personally with your state senator and discuss issues of importance to the banking industry and to your institution and community. We look forward to seeing you on January 26!