Compromise creates method for property tax relief

Emotions ran high again this week, as legislators tried to complete their priorities during the last few days of this legislative session. As I had hoped, the Revenue Committee advanced a package that joined property tax relief, business tax incentives and a major project at the University of Nebraska Medical Center. This proposal was contained in a compromise amendment to LB 1107, a placeholder bill introduced by the Speaker of the legislature, Sen. Jim Scheer of Norfolk.

The current Property Tax Credit Fund, reflected on your property tax statement, is funded at $275 million per year. Under the compromise amendment, this amount of funding would become a statutory minimum. Furthermore, if the initiative petition to legalize casino gambling at horseracing tracks is approved by voters, 70% of taxes collected on the casino revenue would go into the Property Tax Credit Fund, which would be in addition to the $275 million.

The compromise amendment creates an additional method for property tax relief, by authorizing a refundable income tax credit based on the amount of school district property taxes paid during the prior year. This income tax credit could be claimed by individuals or on corporate returns. Beginning this year, $125 million would be appropriated for the income tax credit. This amount would be increased as revenue growth allows, until it reaches $375 million by the fifth year. If net receipts exceed the forecast by 3.5% but the cash reserve is below $500 million, then 50% of the excess is added to the initial $125 million. If net receipts exceed the forecast by 3.5% and the cash reserve contains at least $500 million, then all the excess is added to the $125 million to increase the amount of the income tax credit. Once the $375 million level is met, funding would increase annually, based on the percentage increase in the total assessed value of property statewide over the prior year. The amendment also repeals the personal property tax exemption.

The Nebraska Advantage Act, our current business tax incentives program, sunsets at the end of this year. The amendment contains an amended version of LB 720, which adopts the ImagiNE Nebraska Act. As part of the compromise, caps are placed on the amount of funding available for incentives. During the first two years of the program, caps are set at $25 million, increasing to $100 million for the following two years and $150 million for the fifth year. After that, the cap will be equal to 3% of state net tax receipts. Language allowing the governor to approve additional applications over the cap was removed from the amendment.

Prior to COVID-19, the federal government decided to undertake a major investment to strengthen our country’s capability to deal with large-scale emergencies. The compromise amendment contains the intent of LB 1084, to pledge $300 million in matching funds to help secure a potential public-private hospital and training center at UNMC if $1.3 billion has been received from the federal government and through private donations. The project is referred to as the Nebraska Transformational Projects Act or NExT. No appropriation would occur before the Property Tax Refundable Income Tax Credit amount reaches $375 million. If Nebraska would be selected for this project, it would significantly expand UNMC, grow our economy and strengthen partnerships with the federal government.

Senators approved the compromise amendment to LB 1107 and gave the bill first-round approval on a 43-2 vote. I realize it isn’t everything people wanted and relief has been phased in over a longer period of time due to uncertainty surrounding the coronavirus, but in five years, the legislature will be appropriating $650 million annually toward property tax relief. I feel that this is a significant investment.

LB 814, which would prohibit dismemberment abortion, was also given first-round approval this past week on a 34-9 vote. The bill withstood six hours of debate and a cloture motion.

Legislative pages are selected each fall to work in the upcoming legislative session, beginning in January. Pages respond to requests from senators on the legislative floor. They also do run errands, deliver messages, photocopy materials, assist the presiding officer and staff committee hearings. Pages are paid and must be able to work 20 hours a week. Applications are available online at nebraskalegislature.gov/unicampages and are due by Oct. 2. If any students attending college in Lincoln are interested in this position, contact my office, as I would be happy to write a letter of recommendation. My administrative assistant served as a Page and he said it was a great opportunity and a good learning experience.

I have been hearing from many constituents expressing their opinions on legislation. I encourage this input, as it gives me a good perspective from the people of the 40th legislative district. I can be reached at [email protected]. My telephone number is 402-471-2801 and my mailing address is District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.