As the 2023 Legislative Session draws to a close, the Legislature is putting the finishing touches on a number of major legislative issues. During the past week, the Legislature gave final approval to a package of tax relief and school funding measures (LB 243, LB 583 and LB 754), passed a significant rural workforce housing bill (LB 191), advanced a criminal justice reform measure (LB 50) to the final stage of debate and a Voter ID proposal (LB 514) to Select File. Governor Pillen also issued his line-item vetoes which are designed to save $94.2 million in General Funds and $87 million from the state's Cash Reserve Fund over the next four years.

On deck for the final full week of the session is second round debate on LB 514, consideration of overrides of Gubernatorial vetoes and action on the remaining bills on Final Reading.

Governor Pillen exercised his line-item veto authority to cut more than $140 million in proposed spending over the next two years. Among the Governor's vetoes were more than $45 million in increases for Medicaid provider rates and $40 million in rural workforce housing and middle-income housing funding.

The Appropriations Committee, on a divided 5-4 vote, has recommended overrides of the Medicaid provider rates and rural workforce housing and middle-income housing vetoes, as well as vetoes of proposed salary increase for a state legislative staff and funding for additional staff for the State Auditor's office.

Contacts with your state senator are needed to urge the override of workforce housing vetoes. A "Background Paper" setting forth additional information and talking points accompanies this NBA Legislative Update for your assistance in contacting members of the Legislature.

The Legislature on Thursday gave final approval to a series of bills that will provide property tax relief (LB 243) and income tax relief (LB 754). The two tax relief bills, combined with Governor Pillen's proposal to increase state aid to schools, will provide approximately $6.4 billion in tax relief over the next six years.

LB 243, in part, will increase state tax credits provided against property tax payments and provide state funding for the state's six community colleges, taking this funding off the local property tax rolls.

LB 754 will reduce the maximum individual income tax rate from 6.84% to 3.99%, reduce the maximum corporate income tax rate from 7.25% to 3.99% over the next five years, as well as phase out state income taxes on social security benefits and certain federal pension payments, among other things.

Also sent to the Governor for signature was LB 583. The legislation will use funding from a $1 billion Education Future Fund contained within the state budget bill to provide $1,500 per student in foundation aid and help cover 80% of special education costs.

Lawmakers gave final approval to LB 191, which contains provisions of original LB 249, which was introduced by Senator Tom Briese (Albion) and the priority bill of Senator Teresa Ibach (Sumner). The provisions of LB 249 would 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.

Prior to its amendment into LB 191, provisions in LB 249 to remove "anti-stacking" provisions prohibiting the mixing of certain low-income housing funds with rural workforce housing funds (removal of which was opposed by the NBA), were dropped from the bill.

The Legislature gave second-round approval to LB 727 on Tuesday. Introduced by Senator Lou Ann Linehan (Elkhorn) and designated as a Revenue Committee priority bill, the bill originally provided a sales tax exemption for certain purchases by the state and other public entities. The bill had previously been amended to incorporate provisions of an additional 25 tax-related bills. As advanced to Final Reading, LB 727 addresses, in part, the following bills. which were supported by the NBA:

1. Rural Workforce Housing - The provisions of this bill would reduce the matching funds requirement under the Nebraska Rural Workforce Housing Act from one-half to one-quarter of the amount of workforce housing grant funds awarded. (LB 213)
2. Inheritance Tax Reporting - The provisions of this bill would require petitioners in an inheritance tax determination to report information regarding the amount of inheritance tax revenue generated and the number of persons receiving property subject to the inheritance tax to the County Treasurer of the county in which the inheritance tax determination was conducted. (LB 97)

Prior to advancing the bill to Final Reading, the Legislature eliminated some provisions and modified others to reduce the fiscal impact of the measure to fit within the budget parameters.

A bill on the NBA Affirmative Legislative agenda has been added as an amendment to LB 157, a bill relating to temporary guardians, which has been designated as a priority bill by the Planning Committee. Following adoption of the amendment, the bill was advanced to Select File.

The provisions of LB 330, introduced by Senator Wendy DeBoer (Omaha), which have been incorporated into LB 157, 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.

Issue: Governor Veto of Workforce Housing Funds

Action: Encourage Support for Motion to Override Veto

Background:
Governor Pillen has vetoed $40 million for funding for rural workforce housing and middle-income housing. The motion to override will be taken up by the Legislature on Wednesday, May 31.

CONTACT YOUR STATE SENATOR IMMEDIATELY TO ASK THEM TO SUPPORT THE RURAL WORKFORCE HOUSING AND MIDDLE-INCOME HOUSING FUNDING VETO OVERRIDES.

In contacting your state senator, please consider using the following arguments:

1. Appropriate housing availability is a continuing problem in Nebraska. From workforce housing to affordable housing, this shortage negatively impacts communities throughout the state. Community efforts to provide housing for workers are hampered when development costs outpace sales prices and builders can’t afford to meet specific housing needs.
2. Rural workforce housing and middle-income housing projects have been a great success, have provided a strong return on investment for the state and local communities and should receive continuing support. These public/private partnerships utilize state resources and significantly compound their impact at the local level.
3. Rural workforce housing and middle-income housing projects provide an opportunity for private and public entities to join together to create appropriate housing that creates a positive climate in which their communities can thrive.

PLEASE CONTACT YOUR SENATOR TODAY TO ASK THEM TO SUPPORT THE RURAL WORKFORCE HOUSING AND MIDDLE-INCOME HOUSING FUNDING VETO OVERRIDES.

Email Your State Senator
In contacting your state senator, you may contact them via email by using the first letter of their first name; their last name @leg.ne.gov (EX: [email protected] or [email protected]).

Check out the Unicameral's website for senator contact information:
http://www.nebraskalegislature.gov/senators/senator_list.php

Via U.S. Postal Service:
All senators have the same PO Box number, City, State and Zip Code. Example:

Senator Mike Jacobson, District #42
State Capitol
PO Box 94604
Lincoln, NE 68509-4604

Protesters filled the rotunda on Tuesday evening as lawmakers considered an amendment to revise and combine the provisions of two contentious issues (LB 574 - restrictions on transgender surgery and LB 626 - abortion restrictions) into a single bill (LB 574). The Legislature invoked cloture, approved the amendment and re-advanced LB 574 to Final Reading. A final vote on the amended measure is expected to be conducted on Friday afternoon.

The Legislature sent the final piece of the $10.7 billion state budget package to Governor Pillen on Thursday. Following passage of the budget, other bills with "fiscal impact' can be considered for final passage. With the Legislature having adopted additional spending measures beyond the Governor's initial proposed budget, the Governor may use his line-item veto authority to reduce spending. The Governor will have until Wednesday to sign or to veto any bill within the package or to issue line-item vetoes on specific items.

The mainline budget bill (LB 814) will increase state spending by 2.3% over the next two years. Among other things, the measure provides funding for income and property tax relief, $1.25 billion for the Education Future Fund to increase state aid to schools, the Perkins County canal, construction of a new prison, $20 million for rural workforce housing, and $20 million for middle-income workforce housing.

As finalized, the budget will leave an estimated $892 million in the state's General Fund for tax cuts and other uses over the next two years, and the state's Cash Reserve fund is expected to be at $779 million by June 30, 2025 (13% of annual state revenues).

The Legislature gave first-round approval to LB 727 on Tuesday. Introduced by Senator Lou Ann Linehan (Elkhorn) and designated as a Revenue Committee priority bill, the bill originally provided a sales tax exemption for certain purchases by the state and other public entities. The Revenue Committee amendment to LB 727 incorporated provisions of an additional 20 tax-related bills. A General File floor amendment inserted five additional bills to the tax package. As amended, LB 727 addresses, in part, the following bills, which were supported by the NBA.

1. Rural Workforce Housing - The provisions of this bill would reduce the matching funds requirement under the Nebraska Rural Workforce Housing Act from one-half to one-quarter of the amount of workforce housing grant funds awarded. (LB 213)
2. Inheritance Tax Reporting - The provisions of this bill would require petitioners in an inheritance tax determination to report information regarding the amount of inheritance tax revenue generated and the number of persons receiving property subject to the inheritance tax to the County Treasurer of the county in which the inheritance tax determination was conducted. (LB 97)

The Legislature has given second-round approval to LB 531, a bill supported by the NBA. Introduced by Senator Terrel McKinney (Omaha) and designated as a priority bill by the Urban Affairs Committee, LB 531 would provide funding for grants to multiple proposals seeking to revitalize parts of North and South Omaha.

Last session, the Legislature allocated approximately $335 million to fund transformational projects in North and South Omaha. While some funds have been directed to specific projects, about $225 million in grants remain to be allocated, which will be awarded to North and South Omaha entities to be selected by the Department of Economic Development.

The 2023 Legislative Session is heading into the home stretch. Prior to adjourning for a long, four-day weekend, lawmakers took action on bills relating to the state budget (LB 814 and LB 818), K-12 education funding (LB 583), property tax relief (LB 243) and income tax relief (LB 754). When the Legislature reconvenes next Tuesday, they will consider a Revenue Committee priority bill (LB 727) containing 21 separate bills and an amendment that will combine revised versions of a bill to restrict abortions (LB 626) and a bill to restrict transgender surgery and use of hormone blockers (LB 574).

In a flurry of activity on Thursday, the Legislature advanced bills to provide extensive property tax relief (LB 243) and income tax relief (LB 754). Prior to advancing the bills, amendments were adopted to reduce the fiscal impact of each measure. As amended, the two tax relief bills, combined with Governor Pillen’s proposal to increase state aid to schools, would provide approximately $6.4 billion in tax relief over the next six years.
 
LB 243, in part, would increase state tax credits provided against property tax payments and provide state funding for the state’s six community colleges, taking this funding off the local property tax rolls.
 
LB 754 would reduce the maximum individual income tax rate from 6.84% to 3.99%, reduce the maximum corporate income tax rate from 7.25% to 3.99% over the next five years, as well as phase-out state income taxes on social security benefits and certain federal pension payments, among other things. To reduce the fiscal impact of the income tax cuts, amendments were adopted to eliminate a proposal to reduce income taxes on business assets and research expenditures, as well as to increase a deduction for state and local taxes paid by individual taxpayers. In addition, a package of tax credits for childcare expenses and providers were reduced to save approximately $10 million each year.

The mainline budget bill appropriating $10.7 billion for state operations has been given second-round approval. Under the bill, state General Fund spending would grow by an average of 2.3% over the next two years.
 
Highlights of the budget include additional funding ($95.8 million) for a new $350 million prison; $574.5 million for the Perkins County Canal; $20 million for Rural Workforce Housing; and $20 million for Middle-Income Workforce Housing.
 
Prior to advancing the budget bills (LB 814 and LB 818), lawmakers deferred a portion of the transfer to the Cash Reserve Fund, retaining an extra $170 million in the state’s General Fund. This action leaves $896 million available for tax cuts and other uses during the biennium, rather than the $726 billion originally available. The reduction in transfers into the Cash Reserve Fund will leave the fund at $779 million (13% of annual state revenues) rather than the 16% level originally proposed.

With only 15 “working days” remaining in the 2023 Legislative Session, lawmakers have a great deal of work to do prior to adjourning for the year. Debate on the budget bills began this week and is expected to be completed early next week, after which the tax relief proposals and other bills with fiscal impact may be considered.

Lawmakers have given first-round approval to the mainline budget bill (LB 814) which provides $10.7 billion in state spending over the next two years. Also advancing to the second-round of debate was LB 818, which provides for various transfers from and to the General Fund and the Cash Reserve.
 
The budget provides funding for construction of a new $350 million prison and also provides $20 million in funding ($10 million each year) over the next two years for both rural workforce housing and middle-income workforce housing. The budget retains nearly $715 million for tax relief and other uses during the biennial budget period. The package of income and property tax relief is estimated to reduce state revenues by approximately $870 million over the next two years. As a result, it is anticipated that some of the tax relief provisions may need to be pared back or the Governor may utilize his line-item veto authority to reduce spending measures.
 
As advanced, LB 814 will increase state General Fund spending by an average of 2.3% over the next two years compared to Governor Pillen’s original budget proposal which called for 1.3% average spending growth.

A bill on the NBA Affirmative Legislative agenda has been proposed as an amendment to LB 157, a bill relating to temporary guardians, which has been designated as a priority bill by the Planning Committee and advanced to General File.
 
The provisions of LB 330, introduced by Senator Wendy DeBoer (Omaha) 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.