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 Revenue Committee Advances Property Tax Relief Bill
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LB947, the property tax relief measure proposed by Governor Pete Ricketts, was sent to the floor by the Revenue Committee on a 5-3 vote this week. The committee amendment,
AM2542, would provide a refundable credit against income tax for a percentage of property taxes paid on a homestead. A higher credit would apply to taxes paid on agricultural and horticultural land. Corporate income tax rates would be reduced and funds would be provided for job training by the bill.
More than 20 amendments are pending on the bill. Debate on LB947 is expected next week.
Attorney General's Opinion
An Attorney General's
opinion was issued on the constitutionality of LB947 and
LB829, Senator Steve Erdman's priority bill to grant an income tax credit for property taxes paid to fund K-12 education. The opinion first examined whether the payment of property taxes to a local government as a means of foregoing a state income tax constitutes a commutation of taxes, which is prohibited by the Nebraska constitution. Under Article VIII, section 4, the Legislature is prohibited from releasing or discharging any county, city, township, town, or other tax from their proportionate share of taxes to be levied for state purposes. The opinion concludes that the proposed income tax credits do not directly fall within the meaning of "commutation". The income tax credits do not alter or change the amount of property taxes paid, nor do they substitute one form of payment of property taxes for another.
The opinion also examined whether the preferential treatment for Nebraska income tax filers over non-resident property taxpayers is facially discriminatory on the basis of the Commerce Clause and/or the Dormant Commerce Clause of the U.S. Constitution. Under LB947, the refundable tax credit is limited to two classes of resident taxpayers: 1) resident individual homestead owners and 2) resident individuals paying property taxes on agricultural and horticultural land, farm sites, and improvements that are agricultural or horticultural in nature. If property taxes are paid by pass-through entities, such as certain corporations or trusts, the taxes are allocated to shareholders, partners and other beneficiaries in the same proportion that income is distributed.
Under LB829, the credit is allowed to "each taxpayer", which presumably refers to all taxpayers subject to Nebraska income tax. The opinion states that although the bill specifically extends the credit to certain types of resident and nonresident persons and entities, the "each taxpayer" language extends the credit to any resident or nonresident taxpayer subject to Nebraska income tax.
The opinion concludes that both bills could be amended to avoid questions about their constitutionality. "This can be done by allowing the credit to all taxpayers paying taxes on qualifying property, resident and nonresident, regardless of whether they are subject to Nebraska income tax."
Other Property Tax Bills
An attempt may be made to pull Senator Tom Briese's priority bill,
LB1084, from the Revenue Committee as an alternative to LB947. As introduced, LB1084 would provide property tax relief through increased school aid and the Property Tax Credit. The property tax changes would be offset by an increase in state sales tax, removing sales tax exemptions, taxing some services, and increasing the cigarette tax.
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Cloture Vote on Budget Bill Fails
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Two attempts to end debate on a budget bill failed this week and senators left for the weekend with instructions from Speaker Jim Scheer to come up with a compromise so that the budget can be adopted. On Wednesday, senators advanced
LB945 and
LB946, but were unable to reach agreement on how to distribute federal Title X funds for medical clinics that provide family planning services in
LB944. A vote to invoke cloture and end debate failed.
Senators debated the bill again on Friday and again a cloture motion was unsuccessful. According to the rules of the legislature, in a short session, the appropriations bills must be passed on the 50th day, which is March 27. Senators will need to suspend the rules to allow for a later date.
Senators will take up consent calendar bills next Monday starting at 8:00 p.m. and again on Tuesday. The consent calendar bills for both days are listed on Monday's
agenda. Debate on Select File bills is tentatively scheduled for Wednesday and Final Reading bills will be debated on Thursday. Friday, March 20 and Monday, April 1 are recess days.
Thirty-nine bills have been passed and signed by Governor Ricketts thus far. Adjournment is tentatively scheduled for April 18.
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Retirement Changes Advance from First Round
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Schools and county hospitals that are contemplating business decisions that would result in employees being removed from the state-administered retirement plans would have to provide notice to the state under
LB1005 that advanced from General File on Tuesday. The school or county hospital would pay the costs for an actuarial study to determine the effect on the plan and pay an amount equal to any funding obligation.
The bill was introduced in response to school districts that have chosen to outsource food service workers, bus drivers, janitorial staff and other employees to cut their overhead. A county hospital is considering doing the same. Because the school and county retirement plans' actuarial assumptions do not contemplate a number of participants leaving the plan at the same time, the bill would ensure that the plans, the plan members, and the state would not become financially liable as the result of a school or county hospital business decision.
Other bills were included in the committee amendment that was adopted before the bill advanced.
LB698 would make the promulgation of rules and regulations by the Nebraska Public Employees Retirement Board optional, rather than mandatory.
LB699 would insert "actuarial equivalent" harmonizing language that was inadvertently omitted from
LB415 last year.
LB700 and
LB548 would address the Class V school plan and investments made by the University of Nebraska.
On Tuesday senators also advanced
LB596 to create a registry program for persons who practice therapeutic massage on horses. Amendments have been filed for Select File debate.
On Wednesday, senators advanced
LB1132, a bill to allow victims of sex trafficking to petition the county or district court to have related convictions or adjudications set aside. The court order would nullify the conviction or adjudication and remove all civil disabilities and disqualifications imposed as a result of the conviction of adjudication. An amendment was adopted to require reporting by medical professionals of injuries which reasonably appear to be the result of an actual or attempted sexual assault. In some instances, a law enforcement agency receiving a sexual assault evidence collection kit would have to preserve it for 20 years or as otherwise ordered by the court.
LB1009, a bill to allow increased speed limits on Nebraska highways, was advanced to Select File following the adoption of an amendment to exclude the interstate from higher speed limits. A committee amendment was adopted to move a proposed new "super-two" functional classification of highway into the "major arterial" classification. A "super-two" is defined as a two-lane highway designed primarily for through traffic with passing lanes spaced intermittently and on alternating sides of the highway to provide predictable opportunities to pass slower moving vehicles.
LB909, a bill to amend titling provisions for assembled and kit vehicles became the basis for a Transportation and Telecommunications Committee omnibus bill that advanced from General File on Thursday. Among the provisions that were part of the committee amendment are the authority for metropolitan utilities districts to register their motor vehicle fleet in a single county (
LB740) and the creation of a flood damaged category of titles (
LB895). Another section would allow state ID holders to renew them electronically.
LB896 would require trailers, such as farm trailers, that are not titled to have identification numbers assigned and affixed.
LB1049 would amend the definition of low-speed vehicles to include certain three-wheeled vehicles.
LB1092 would change the definition of autocycles, which are vehicles that are not completely enclosed.
LB1136 would allow auto auctions to get titles for vehicles by presenting an affidavit affirming that the title is unavailable to a county treasurer.
On Thursday, senators advanced Senator Justin Wayne's priority bill,
LB990, to prohibit persons under the age of 25 from possessing a firearm if they have previously been adjudicated in juvenile court for a felony or an act that would constitute a misdemeanor crime of domestic violence.
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Snapshots of County Issues
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Bills Debated on General File
Land banks and short-term rentals, such as Airbnb, were the focus of first round debate on
LB873. As introduced, LB873 would clean up more than 235 statues in Chapter 19 related to municipalities by alphabetizing terms, changing subject-verb agreement, correcting gender references and the like. An Urban Affairs committee amendment was adopted to pull in concepts from a number of bills, including
LB735 that would allow cities to enter into interlocal agreements with counties to help enforce nuisances within the city's extraterritorial jurisdiction.
An amendment was offered by Senator Adam Morfeld that was based on
LB756, his bill to set out guidelines for short-term rentals of residential property, such as Airbnb. Senator Paul Schumacher called for a division of the bill so that tax, reporting, and audit provisions could be addressed separately from rental provisions. The latter amendment was adopted and, at Senator Morfeld's request, the tax, reporting, and audit provisions did not advance.
Another bill included in the committee amendment is
LB854 that would allow cities of all sizes to operate land banks to help return tax delinquent property to the tax rolls. Existing law limits land banks to cities located within a county with a city of the metropolitan class or cities within a county in which at least three cities of the first class are located. Some senators began to question the authority of land banks to issue bonds under existing law and time ran out before a vote on a floor amendment to remove land bank provisions from LB873. Speaker Jim Scheer said the bill will appear on the agenda at a later date.
Senators also debated
LB921, a bill to create a licensing exception from the State Electrical Act for certain farm buildings. After three hours of debate on the General Affairs priority bill, the Legislature moved on without voting to
LB948, the next item on the agenda. LB948 would replace mandatory promulgation of rules with optional rules. Time ran out before debate on LB948 ended.
On Wednesday, senators debated a measure to create neighborhood improvement districts. After debate on the amount of special assessments that could be imposed, the types of projects that could be undertaken by a district, and the similarities to business improvement districts, a motion to bracket
LB986 until April 18 prevailed on a 27-18 vote.
Governor Ricketts signed eight bills into law on March 21.
LB874 rewrites tax increment financing (TIF) laws. Among other provisions of the bill, tax statements must show the amounts of taxes that are allocated to the redevelopment project and contain a statement explaining that taxes on the real property have been divided as part of a redevelopment project for a period not to exceed 15 years.
LB17 updates the Nebraska Appraisal Management Company Registration Act to reflect federal changes.
LB256 allows a city of the first class, second class or village to adopt a vacant property registration ordinance that would create a database of vacant properties. The ordinance would require a plan for occupancy of the property and allow a program administrator to inspect the interior and exterior of the property. Unpaid registration fees and fines for violations of the ordinance would become a lien upon the property upon the recording of a notice of the register of deeds office. The lien would be subordinate to all liens recorded prior to the time the notice of the lien is recorded.
Governor Ricketts vetoed
LB350, a measure to permit specific criminal convictions to be nullified. In his veto message, he said the bill expands the set-aside to serious felony convictions and sends the wrong message to victims of crime and to society. The Legislature has five days to override the veto.
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