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UNICAMERAL UPDATE News published daily at Update.Legislature.ne.gov Vol. 42, Issue 18 / May 7 - 10, 2019 Budget package clears first round Property tax relief through increased school funding debated awmakers debated a proposal May 7 to reduce property taxes L by raising the state sales tax rate and directing the additional revenue to Nebraska’s public schools. Elkhorn Sen. Lou Ann Linehan, sponsor of LB289, said 166 of Nebras- ka’s 244 school dis- tricts receive little funding through the state’s school aid formula. Under the proposal—con- tained in a pending Sens. Steve Erdman (left) and John Stinner confer during the first round of debate on the state Revenue Commit- Sen. Lou Ann Linehan budget May 8. tee amendment that would replace the awmakers gave first-round The governor’s proposal called for a bill—every school would receive at least approval May 8 to the state’s general fund transfer of $51 million in a third of its funding from the state, L $9.3 billion budget package. each of the next two fiscal years to the she said. The state budget is structured on a Property Tax Credit Cash Fund, bring- This significant increase in aid two-year basis, with the budget enacted ing the fund’s total to $272 million. would reduce the state’s overreli- during legislative sessions held in odd- An Appropriations Committee ance on property taxes to fund K-12 numbered years. amendment would have reduced that education and provide “meaningful” As introduced, the Appropriations transfer to $25 million annually and property tax relief for every property Committee budget proposal would directed the other $26 million to the owner in the state, Linehan said. result in an unobligated ending bal- state’s Cash Reserve Fund—commonly ance at the end of fiscal year 2020-21 referred to as the “rainy-day fund.” Revenue components that is $2 million above the 3 percent The amendment would result in a minimum reserve. The budget pack- cash reserve balance of $372 million The proposal would be funded by an age reflects a two-year average spend- in FY2020-21. increase in the state sales tax rate from ing growth rate of 3 percent. Gering Sen. John Stinner, chair- 5.5 to 6 percent beginning July 1, 2019. person of the committee, said a bal- The amendment also would impose Property tax relief anced approach to crafting the budget sales tax on bottled water, candy, soft should include property tax relief, but drinks and ice and increase the tax on a LB298, introduced by Speaker Jim also should focus on the long-term package of cigarettes from 64 cents to $1. Scheer of Norfolk on behalf of Gov. fiscal health of the state—which he The amendment also would impose Pete Ricketts, would repeal and create said includes building the cash reserve taxes on approximately 20 services, funds and make certain fund transfers. (continued page 2) (continued page 3) INSIDE: Cloture attempt fails on land bank bill • Regional public transit bill advanced May 7 - 10, 2019 Budget package clears first round (continued from front page) back to at least 10 percent of to adopt the committee amend- revenue. ment, the Legislature advanced Elkhorn Sen. Lou Ann LB298 to select file 44-0. Linehan, chairperson of the Revenue Committee, offered Mainline budget an amendment to retain the original transfer. She said that LB294, also introduced while the cash reserve is impor- by Scheer at the request of tant, property tax relief must be the governor, is the mainline the top priority. budget bill. An Appropria- “If we’re serious about tions Committee amendment, property tax relief—which I adopted 41-1, replaced the bill think we all are—we need to and contains recommenda- make sure that the $51 million tions for state operations and each year goes to the property Sen. Lou Ann Linehan said Nebraskans expect propety tax relief state aid. tax relief fund,” Linehan said. as part of any budget package approved by the Legislature. The amendment incorporat- Albion Sen. Tom Briese supported “This is a conservative principle,” ed provisions of several bills, including: the amendment, saying Nebraska is in Lathrop said. “You don’t run your • LB174, sponsored by Lincoln a “property tax crisis.” checking account with nothing in Sen. Kate Bolz, which would “This is about doing what taxpay- there; you don’t run your personal increase general funds to the ers deserve and that’s directing these life with no savings account of some state Office of Violence Preven- dollars to property tax relief,” he said. kind. This is our version of a savings tion by $300,000 per year in the Sen. Steve Lathrop of Omaha account and we’re going to need it.” next two fiscal years; opposed the amendment. Over the Stinner also opposed the amend- • LB327, also sponsored by Bolz, last several years, he said, lawmakers ment, calling it “pandering” to the which would increase behav- have drawn down the cash reserve state’s taxpayers. ioral health provider rates by fund from $720 million to around “It’s the worst kind of politics,” $1.5 million in FY2019-20 and $300 million. And it’s only a matter he said. $3.6 million in FY2020-21; and of time before the state faces another Senators voted 28-8 to adopt the recession, he said. Linehan amendment. After voting 39-0 (continued page 4) 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, twitter.com/UnicamUpdate and facebook.com/UnicameralUpdate. Clerk of the Legislature: Patrick J. O’Donnell Editor: Kate Heltzel; Writers: Kyle Harpster, Ami Johnson, Mike Malloy; Photographer: Bess Ghormley Printed copies of bills, resolutions and the Legislative Journal are available at the State Capitol room 1023, 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 • 106TH LEGISLATURE May 7 - 10, 2019 least $3,474 per student and up to schools, he said, the amendment would Property tax $5,211 per student. reduce property taxes for agricultural relief through If total state aid through TEEOSA landowners by only 9 percent. totaled less than 33.33 percent of a dis- “We have to rely on different rev- increased school trict’s total formula need, the district enues than property taxes to fund our also would receive guaranteed funding schools,” Friesen said, “but that does funding debated aid to make up the difference. not mean we’re going to see a huge (continued from front page) The amendment would reduce the drop in the property tax loads.” including motor vehicle maintenance value of all property classes for school Lincoln Sen. Kate Bolz said ad- and repair; maintenance, painting and funding purposes and change school dressing high property taxes through repair of single-family homes; com- districts’ maximum levy. It also would additional K-12 funding would be a mercial lawn care; dry cleaning; beauty limit increases in school funding from positive step. However, she expressed and personal care services; wedding property taxes by an inflation rate concern about the proposal’s effect on planning; personal training; and stor- based on the Consumer Price Index districts like Lincoln Public Schools, age, moving, plumbing, HVAC and and a district’s real property growth. which rely on equalization aid to serve certain veterinary services. North Platte Sen. Mike Groene, students in poverty, those with special Additionally, the amendment who supported the amendment, said needs and English language learners. would repeal a personal property tax limiting the annual increase in property Equalization aid—state aid intended to exemption and increase the tax on taxes a school could collect is necessary cover the needs of districts that cannot be the transfer of title to real estate from to provide property tax relief through met by other resources—is the only form $2.25 to $3.25 per $1,000 of value. TEEOSA. The proposal would offset of state aid not guaranteed in the pro- To offset the sales tax increase’s that loss in property taxing authority posal, Bolz said, meaning it could be cut effect on low-income Nebraskans, with additional state aid, he said. more easily during a tough budget year. Linehan said, the proposal would Groene said the amendment is Sen. Adam Morfeld of Lincoln op- increase a state refundable income a more stable source of state aid for posed the amendment, saying it would tax credit based on the federal earned schools and treats each student equally. benefit smaller school districts at the income tax credit, which is intended “I did not come down here to raise expense of larger, equalized districts.