Lawmakers returned on Thursday, April 18, for the final day of the 60-day session. The agenda included only eight bills. However, several of the bills were viewed as some of the most controversial measures taken up during the session. This included heated debate on sales and property tax measures (LB 388), an increase in the Nebraska Documentary Stamp Tax (LB 1363) and direct appropriations from the State of Nebraska to fund scholarships for students attending private schools (LB 1402). Governor Pillen did not veto any of the more than 100 bills advanced last week.

In a shock to many, LB 388 was pulled from the agenda, thereby killing the bill. LB 388 was introduced by Senator Lou Ann Linehan (Elkhorn) and represented Governor Pillen's property tax plan. The bill was met with strong opposition from a very broad coalition and was the subject of a newspaper, radio, television and text message campaign over the last seven days. Senator Julie Slama (Dunbar) and Senator Danielle Conrad (Lincoln) led the filibuster against the bill. Included in LB 388 were the following provisions:

• "Front-loading" of existing property tax credits, rather than having to claim the credits on income tax returns
• Increase in cigarette tax by 36 cents to $1 per pack
• 25% tax on edible hemp products
• 20% tax on vaping products
• 20% tax on skill games
• Elimination of sales tax exemptions for soda, candy, and veterinary and pet services
• 7.5% tax on certain advertising

Also included was a 3% cap on revenue growth for cities, villages and counties. An amendment was adopted to include exceptions to increase salaries to address shortages for law enforcement and first responders.

At the conclusion of the regular agenda, Governor Pillen addressed the Legislature in his farewell remarks. Although he began by applauding the many achievements of the 108th Legislature, he soon made clear his disappointment in the body's failure to advance LB 388. Governor Pillen referred to adjournment sine die as "halftime" and vowed to call a special session to address property taxes.

The Legislature also advanced LB 1402, which was introduced by Senator Linehan. LB 1402 would appropriate $10 million annually to be used for scholarships for K-12 students attending private schools. This measure could nullify the ballot referendum for LB 753 set for the November general election. LB 753, known as the "Opportunity Scholarship Act," passed last year and provides an income tax credit for donating to scholarship-granting organizations. The measure advanced on a 32-15 vote. Opponents have vowed a legal challenge or another petition drive to force a referendum on the bill.

The 2024 legislative session will be the last for Senators Joni Albrecht (Thurston), Carol Blood (Omaha), Bruce Bostelman (Brainard), Tom Brewer (Gordon), Steve Erdman (Bayard), Steve Halloran (Hastings), Lou Ann Linehan (Elkhorn), John Lowe (Kearney), Mike McDonnell (Omaha), Tony Vargas (Omaha), Lynne Walz (Fremont), Justin Wayne (Omaha) and Anna Wishart (Lincoln) due to term limits. Senator Fred Meyer (St. Paul) and Senator Slama have decided not to run for reelection. Elections this year will include 25 of the 49 seats, with 15 of those being open with no incumbent running. However, given Governor Pillen's comments, the service of these Senators is likely not over yet.

The Nebraska Legislature completed day 59 of the 60-day session on Thursday. The week ended with just over 100 bills on Final Reading being considered and approved by the Legislature. This capped off three weeks of late-night sessions often mired in filibusters. Senators will reconvene on Thursday, April 18, for the final day of the session. Senators will take up a handful of bills still left on Final Reading. Governor Pillen will have until Wednesday, April 17, to veto any bill that passed on Thursday. This will allow the Legislature to take up any motions to override any veto issued by Governor Pillen.

Much of the most significant legislation taken up this session still awaits Final Reading consideration next week. This includes part of the Governor's tax package (LB 388), updates to the Nebraska Good Life Transformational Projects Act (LB 1317), and a bill that would provide direct appropriations for scholarships (LB 1402), which would also nullify the ballot initiative recall of the Opportunity Scholarships Act passed during the 2023 session.

After significant debate and paring down from the previous package, senators advanced LB 388 on a vote of 28 to 14, with five senators present not voting. Following several attempts to strip out various provisions, the bill limped forward to Final Reading. Teh bill, as advanced, includes the following measures:

• "Front-loading" of existing property tax credits, rather than having to claim the credits on income tax returns
• Increase in cigarette tax by 36 cents to $1 per pack
• 25% tax on edible hemp products
• 20% tax on vaping products
• 20% tax on skill games
• Elimination of sales tax exemptions for soda, candy, and veterinary and pet services
• 7.5% tax on certain advertising

Also included is a 3% cap on revenue growth for cities, villages and counties. An amendment was adopted to include exceptions to increase salaries to address shortages for law enforcement and first responders.

LB 1023 - Adopt the Relocation Incentive Act
Introduced by Senator Brad von Gillern (Omaha), LB 1023 includes the Relocation Incentive Act initially introduced by Senator Beau Ballard (Lincoln). The bill provides a tax credit for employers who pay relocation expenses for an employee who relocates to the State of Nebraska. The original bill would allow entities to claim the credit on their corporate income tax returns. Senator Ballard and Senator von Gillern worked with the NBA to ensure banks and insurance companies could also claim the tax credit.

LB 1073 - Third-Party Administrators of Insurers On-Site Audits
Introduced by Senator Julie Slama (Dunbar), LB 1073 was amended to include the following bills which are supported by the NBA.

The bills that were incorporated into LB 1073 are as follows:

LB 873, introduced by Senator Ballard, would authorize use of real-time or instant payments through the FedNow service of the United States Federal Reserve system, or through the RTP network of the Clearinghouse Payments Company LLC for purposes of the good funds requirement associated with real estate closings and would increase from $500 to $1,500 of the amount of funds that need not be available for disbursement from good funds.

LB 1135 - Right-to-List Home Sale Agreements
Introduced by Senator Robert Dover (Norfolk), LB 1135 would make void and unenforceable any right-to-list home sale agreement (an agreement by the owner of a residential real estate providing another person with the exclusive right to list real estate for sale at a future date in exchange for monetary consideration which purports to be a lien, encumbrance or other real property security interest) or lien or encumbrance resulting from such an agreement which is presented for recording, or recorded in the office of the register of deeds or county clerk.

LB 1409 - Condominium Association Declaration Amendment
Introduced by Senator Eliot Bostar (Lincoln), LB 1409 would limit the requirement to obtain lienholder approval of amendments to a condominium association declaration to a) time-share arrangements; b) unit subdivisions; and c) issues affecting lien priorities and lienholder foreclosure rights. The bill would deem a lienholder which fails to respond to a request for approval of amendment to declarations within 60 days of the request to have given approval. Prior to advancing, amendments proposed by the NBA providing greater protection to lienholders were adopted by the Committee.

LB 1074 - Omnibus Department of Banking Bill
Also introduced by Senator Slama, LB 1074 would, among other things, renew the annual bank and savings and loan "wild-card" provisions.

The bills that were incorporated into LB 1074 are as follows:

LB 872 - Central-Bank Digital Currency
Introduced by Senator Rob Clements (Elmwood), LB 872 would prohibit political subdivisions or state agencies from accepting a central-bank digital currency as a method of cash payment of any tax, levy, excise, duty, custom, toll, interest, penalty, fine, license, fee or assessment of whatever kind or nature. (NBA Position: Affirmative Legislation)

LB 1122 - Misleading Advertisements/Solicitations
Senator Ballard is the sponsor of LB 1122, which would increase the maximum fine that the Department of Banking can impose for violations involving misleading advertisements or solicitation of bank customers from $1,000 to $5,000. Current law places restrictions on the ability of any person to include the name, trade name, logo or symbol of a financial institution in a written solicitation for financial products or services directed to a consumer who has obtained a loan from the financial institution without the consent of the financial institution, unless the solicitation clearly and conspicuously states that the person is not sponsored or affiliated with a financial institution and that the solicitation is not authorized by the financial institution. (NBA Position: Affirmative Legislation)

LB 1176 - Public Entities Pooled Investment Act
Introduced by Senator George Dungan (Lincoln), LB 1176 would establish investment priorities, customer disclosures and restrictions on investments for political subdivision investment pools. As amended by the Committee prior to advancing, the bill would specifically limit investments by a political subdivision investment pool in commercial paper to commercial paper a) issued by a United States corporation; b) with a stated maturity of 270 days or fewer from its date of issuance; and c) which is rated in the highest quality category by at least two nationally recognized rating agencies at the time of purchase. In addition, the bill would limit investments in commercial paper by a political subdivision investment pool to no more than 50% of the total funds eligible for investment at the time of purchase and to no more than 5% of the total funds available for investment in commercial paper of a single issuer. (NBA Position: Affirmative Legislation)

LB 1301 - Foreign-Owned Real Estate National Security Act
Introduced by Senator Barry DeKay (Niobrara), LB 1301 updates the Foreign-Owned Real Estate National Security Act. The bill strengthens protections for ownership of land with close proximity to military installations. Senator DeKay worked closely with the NBA to ensure financial institutions holding mortgages or deeds of trust are protected if foreign entities are required to divest their ownership.

To complete Friday morning's activities, before moving on to LB 575 discussed above, two priority bills designated by the Banking, Commerce and Insurance Committee (LB 1074 - Banking Priority Bill and LB 1073 - Insurance Priority Bill) advanced to Final Reading. The bills, as amended and advanced from Committee - along with other pending amendments - contain the following:

LB 1074 - Omnibus Department of Banking Bill
Introduced by Senator Julie Slama (Dunbar), LB 1074 would, among other things, renew the annual bank and savings and loan "wild-card" provisions. Prior to advancing the bill, the Committee adopted amendments incorporating the provisions of LB 710 (Credit Union Act), LB 872 (Central-Bank Digital Currency) , LB 1122 (Misleading Advertisements/Solicitations) and LB 1176 (Public Entities Pooled Investment Act).

The bills to be incorporated into LB 1074 are as follows:

LB 710 - Credit Union Act
Introduced by Senator George Dungan (Lincoln), LB 710 would: a) authorize a credit union to provide written notice of any change in its principal place of business within the state to be delivered to the Department in person or sent by regular or electronic mail; b) authorize a credit union to conduct annual or special meetings by virtual conferencing platform; c) authorize the board of directors of a credit union to conduct regular meetings not less frequently than six meetings annually, with at least one meeting in each calendar quarter; d) authorize a credit union's board of directors to appoint one or more associate directors to serve in an advisory capacity; and e) authorize a credit union to invest in insurance policies and other investment products to fund employee benefit plans for its employees not to exceed 15% of the net worth of a credit union from a single issuer or 25% of the net worth of a credit union in aggregate.

Provisions of the original bill - which were opposed by the NBA and which have been removed in the Committee amendment to LB 1074 - would have: a) eliminated requirements for the Director of the Nebraska Department of Banking and Finance (Department) 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 a credit union association's bylaws which are brought before the Department; b) allowed a credit union with a main chartered office or 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; c) expanded the field of membership of a credit union to include persons or organizations within a geographically defined community, neighborhood or rural district; d) authorized 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; and e) repealed the 18% usury rate on credit union loans. (NBA Position: Objections Favorably Resolved)

LB 872 - Central-Bank Digital Currency
Introduced by Senator Rob Clements (Elmwood), LB 872 would prohibit political subdivisions or state agencies from accepting a central-bank digital currency as a method of cash payment of any tax, levy, excise, duty, custom, toll, interest, penalty, fine. license, fee or assessment of whatever kind or nature. (NBA Position: Affirmative Legislation)

LB 1122 - Misleading Advertisements/Solicitations
Senator Beau Ballard (Lincoln) is the sponsor of LB 1122, which would increase the maximum fine that the Department of Banking can impose for violations involving misleading advertisements or solicitation of bank customers from $1,000 to $5,000. Current law places restrictions on the ability of any person to include the name, trade name, logo or symbol of a financial institution in a written solicitation for financial products or services directed to a consumer who has obtained a loan from the financial institution without the consent of the financial institution, unless the solicitation clearly and conspicuously states that the person is not sponsored or affiliated with a financial institution and that the solicitation is not authorized by the financial institution. (NBA Position: Affirmative Legislation)

LB 1176 - Public Entities Pooled Investment Act
Introduced by Senator Dungan, LB 1176 would establish investment priorities, customer disclosures and restrictions on investments for political subdivision investment pools. As amended by the Committee prior to advancing, the bill would specifically limit investments by a political subdivision investment pool in commercial paper to commercial paper a) issued by a United States corporation; b) with a stated maturity of 270 days or fewer from its date of issuance; and c) which is rated in the highest quality category by at least two nationally recognized rating agencies at the time of purchase. In addition, the bill would limit investments in commercial paper by a political subdivision investment pool to no more than 50% of the total funds eligible for investment at the time of purchase and to no more than 5% of the total funds available for investment in commercial paper of a single issuer. (NBA Position: Affirmative Legislation)

LB 1073 - Third-Party Administrators of Insurers On-Site Audits
Introduced by Senator Slama, LB 1073 was amended to include the following bills which are supported by the NBA.

The bills to be incorporated into LB 1073 are as follows:

LB 873 - Real Estate Closing/Good Funds
LB 873, also introduced by Senator Ballard, would authorize use of real-time or instant payments through the FedNow service of the United States Federal Reserve system, or through the RTP network of the Clearinghouse Payments Company LLC for purposes of the good funds requirement associated with real estate closings and would increase from $500 to $1,500 of the amount of funds that need not be available for disbursement from good funds. (NBA Position: Support)

LB 1135 - Right-to-List Home Sale Agreements
Introduced by Senator Robert Dover (Norfolk), LB 1135 would make void and unenforceable any right-to-list home sale agreement (an agreement by the owner of residential real estate providing another person with the exclusive right to list real estate for sale at a future date in exchange for monetary consideration which purports to be a lien, encumbrance or other real property security interest) or lien or encumbrance resulting from such an agreement which is presented for recording, or recorded in the office of the register of deeds or county clerk. (NBA Position: Support)

LB 1409 - Condominium Association Declaration Amendment
Introduced by Senator Eliot Bostar (Lincoln), LB 1409 would limit the requirement to obtain lienholder approval of amendments to a condominium association declaration to a) time-share arrangements; b) unit subdivisions; and c) issues affecting lien priorities and lienholder foreclosure rights. The bill would deem a lienholder which fails to respond to a request for approval of amendment to declarations within 60 days of the request to have given approval. Prior to advancing, amendments proposed by the NBA providing greater protection to lienholders were adopted by the Committee. (NBA Position: Support)

Governor Jim Pillen announced that he signed both state budget bill packages without a single veto. In his praise for the Appropriations Committee, he indicated they provided him with a “fiscally sound” budget that added additional funding to the school aid formula and makes few changes to the current state budget, providing for an average increase in spending of 2.7% (up from 2.3%) and provided $230 million in transfers to support Governor Pillen’s plan to cut property tax payments

LB 388, introduced by Senator Lou Ann Linehan (Elkhorn) advanced to Select File after securing exactly 33 votes to invoke cloture. Senator Steve Erdman (Bayard) changed his vote at the last minute so that the bill could have more time for negotiations. The bill is designed to shift $650 million off local property taxes and onto new and increased sales taxes, resulting in a 30% reduction in property taxes. LB 388 would also impose new and more restrictive caps on local spending by counties, cities and villages. The package was opposed by a wide array of business groups and advocates for low-income individuals due to the increase in sales taxes. Enough support was gained after Senator Linehan pledged to work with Governor Pillen and opponents to find a compromise. Senator Linehan indicated that she would not ask the bill to be placed back on the agenda if a compromise is not reached.
 
The Education Committee advanced the property tax proposal on Tuesday afternoon which is the second part of Governor Pillen’s property tax reduction plan. LB 1331 was advanced from the Committee on an 8-0 vote. The bill was immediately scheduled for debate on Wednesday and moved to Select File on a 45-0 vote. LB 1331 would result in $1.17 billion increase in school aid by doubling the amount of per-pupil “foundation aid” sent to schools from $1,500 to $3,000, funding the hike by a combination of existing state tax credits, increases in sales taxes and elimination of some sales tax exemptions. Governor Pillen’s office estimates the measure would reduce school property taxes by 45% statewide.
 
Although it advanced, the fate of LB 1331 hinges on the outcome of LB 388.