UNICAMERAL UPDATE Stories published daily at Update.Legislature.ne.gov Vol. 40, Isssue 6 / Feb. 6 - 10, 2017 Proposed income tax cuts tied to growth bill heard by the Revenue Committee Feb. 8 would A incrementally reduce the state’s top income tax rate over the next decade if economic growth meets a benchmark rate. Introduced by Sen. Jim Smith of Papillion at the re- quest of Gov. Pete Ricketts, LB337 would reduce the highest individual income tax rate by roughly 0.1 per- Sen. Jim Smith cent per year from Gov. Pete Ricketts encouraged the Revenue Committee to advance his proposed tax package. 2020 to 2027, provided that the Revenue estimates that the bill would re- taxpayers. Small business owners could expected rate of revenue growth from duce state tax revenue by approximately use that extra money to expand, he said. year to year exceeds 3.5 percent. $288 million in fiscal year 2027-28. “Some individuals will see smaller The state’s top income tax rate would Smith said the bill would provide savings than others,” Smith said, “but drop from 6.84 percent in 2020 to 5.99 tax relief for the state’s small business collectively more than $1 billion will percent in 2027, for a total reduction of owners, most of whom pay taxes as in- be introduced into the economy once 0.85 percent. The state Department of dividuals, at a higher rate than corporate LB337 is fully implemented.” (continued page 2) Clements appointed to fill District 2 vacancy obert Clements of Elmwood will fill the legislative seat left vacant by the resignation of Sen. Bill Kintner last month. R Gov. Pete Ricketts announced the appointment at a press conference Feb. 6. Thirty-five people applied to fill the seat, Ricketts said, and he interviewed several before settling on Clements, who was sworn in by Nebraska Supreme Court Chief Justice Mike Heavican after the announcement. “I am honored to have this opportunity to represent the people in my district,” Clements said. “I know the state is facing difficult budget decisions, and I believe my background and experience will be of service during this process.” Clements, executive vice president of the American Exchange Bank, graduated from the University of Nebraska-Lincoln in 1973 with a degree in math and minors in economics and actuarial sci- ence. He worked as an actuary in Kansas City until 1978, when he returned to Elmwood to work at the American Exchange Bank. Clements and his wife Peggy have five children and 10 grand- Sen. Robert Clements is sworn in by Chief Justice Michael Heavican. children. g INSIDE: Meet Sen. Walz • Income-based valuation of ag land proposed • Committee hearing schedule February 6 - 10, 2017 Proposed income tax cuts tied to growth (continued from front page) Each year beginning in November might result in only modest tax relief bill’s tax cuts would go to the wealthiest 2019, the Legislature’s Tax Rate Re- in any single year, the incremental re- 1 percent of Nebraskans and would do view Committee would use data from ductions would make a big difference little to help most small businesses. the Nebraska Economic Forecasting over time. Nebraska businesses and Once the bill is fully implemented, Advisory Board to determine whether those outside the state would consider Fry said, an earner in the state’s top 1 the income tax rate would be cut that fact when they are planning to percent would receive a $5,800 annual for the next fiscal year. If the board expand or relocate, he said. tax cut, while middle income earners determines that the projected rate of “We should strive to make our in- would receive only $39 and people with tax revenue growth is less than 3.5 per- come tax rates competitive with other low incomes would receive nothing. cent, the rate cut would be deferred. states, we should do so incrementally “The revenue losses created by From 2020 to 2026, any deferral and we should do so as available rev- LB337 would, however, impede would remain in effect until the expect- enue allows,” Fulton said. Nebraska’s ability to invest in real ed rate of growth exceeds 4.2 percent. Jeffrey M. Scherer, testifying on economy builders like schools, public Ricketts said the bill would help behalf of the Nebraska Chamber of safety and infrastructure,” she said. Nebraska compete with neighboring Commerce and Industry, spoke in Kenneth Kriz, professor of public states when attracting new businesses. support of the bill, saying it would cut finance at Wichita State University, Iowa is the only neighboring state taxes on the 90 percent of Nebraska testified in a neutral capacity. He said with a higher income tax rate, he said. businesses that pay income taxes at his research, which includes analysis Kansas, Colorado and Missouri have the individual rate. He said the state’s of data from all 50 states over 40 lower rates, and Wyoming and South income tax rate makes it difficult for years, has found no strong correla- Dakota have no income tax. Ricketts businesses to attract skilled workers. tion between tax cuts and economic called the gradual reduction a prudent “If we really want to grow our growth: for every 1 percent cut in and measured approach to reducing economy,” he said, “we must provide taxes, a state’s economy grew by only Nebraska’s income tax rate. income tax relief.” 0.2 percent. Because the tax cuts do “We didn’t get to be a high-tax state Renee Fry, executive director of the not pay for themselves, Kriz said, states overnight,” he said, “and we’re not OpenSky Policy Institute, opposed the then must cut spending. going to get back down out of being a bill, saying that similar automatic cuts “On the whole,” he said, “the ben- high-tax state overnight.” adopted by Oklahoma resulted in a bud- efits do not outweigh the costs of this.” Tony Fulton, state tax commis- get crisis when state tax revenue dropped The committee took no immediate sioner, said that although the proposal unexpectedly. She said 33 percent of the action on the bill. g UNICAMERAL UPDATE The Unicameral Update is a free, weekly newsletter published during the legislative session. It is produced by the Clerk of the Legislature’s Office through the Unicameral Information Office. For print subscriptions, call 402-471-2788 or email [email protected]. Visit us online at Update.Legislature.ne.gov and follow us on Twitter.com/UnicamUpdate. Clerk of the Legislature: Patrick J. O’Donnell Editor: Heidi Uhing; Writers: Kyle Harpster, Kate Heltzel, Ami Johnson; Photographer: Bess Ghormley Printed copies of bills, resolutions and the Legislative Journal are available at the State Capitol room 1104, or by calling 402-471-2709 or 800-742-7456. Status of bills and resolutions can be requested at that number or can be found on NebraskaLegislature.gov. Live video of hearings and floor debate can be viewed on NET2 and at NetNebraska.org/capitol. Senators may be contacted by mail at this address: Senator Name, District #, State Capitol, P.O. Box 94604, Lincoln, NE 68509-4604 Assistance provided by the Clerk of the Legislature’s Office, the Legislative Technology Center, committee clerks, legal counsels, journal clerks, pages, transcribers, mail room and bill room staff and the State Print Shop. The Unicameral Update is available as an audio recording from the Nebraska Library Commission’s Talking Book and Braille Service. Call (800) 742-7691 for more information. THE NEBRASKA LEGISLATURE’S OFFICIAL NEWS SOURCE SINCE 1977 PAGE 2 • UNICAMERAL UPDATE • 105TH LEGISLATURE February 6 - 10, 2017 Meet the Senator Walz wins race to the Capitol f not for a fateful phone call from running for office,” she said. “I knew with people receiving government a former state senator, Sen. Lynne I wanted to do something different. I assistance. IWalz of Fremont might have gone knew I wanted to work with people in “I’ve heard so many times that down a very different path. some capacity.” people on government assistance just She was 14 years into a successful Walz did not take lightly the want to work,” she said. “There’s career as a realtor when she felt an decision to run. She consulted with such a misperception that living on urge to try something new. In a life someone she’s known since she was assistance is this really lucrative way filled with a broad variety of experi- 12 — former state senator, Sen. Ray of life. I want to help get people back ences, Walz had settled on her next Janssen. She knew he would be totally to work and help them gradually get adventure; she would attend seminary honest with her and would have no off that assistance.” and join the ministry. problem telling her if it was a terrible Changing the way students learn is When the suggestion came to run idea. a primary focus of the former teacher. for the Legislature, she was caught Instead, he applauded. He encour- She believes a renewed focus on completely off guard. aged her to rely on her years working practical life skills like budgeting and “I really had never even considered with people with developmental family life skills would better prepare disabilities, teaching young people for their futures. Walz fourth- and fifth- also advocates for more programs grade students and and resources to assist young people helping families turn diagnosed with autism and other de- houses into homes. velopmental disabilities. “I’ve had so many When she’s not serving in Lincoln, jobs and experi- you can find Walz cheering on daugh- ences,” Walz said.