Transcript Prepared By the Clerk of the Legislature Transcriber's Office Revenue Committee February 04, 2016 [LB717 LB940 LB958] The Committee on Revenue met at 1:30 p.m. on Thursday, February 4, 2016, in Room 1524 of the State Capitol, Lincoln, Nebraska, for the purpose of conducting a public hearing on LB958, LB717, and LB940. Senators present: Mike Gloor, Chairperson; Paul Schumacher, Vice Chairperson; Lydia Brasch; Al Davis; Burke Harr; Jim Scheer; Jim Smith; and Kate Sullivan. Senators absent: None. SENATOR GLOOR: Good afternoon. We're going to get started. Thank you. Thank you for quieting down so quickly. I should have been an educator. I'm Senator Mike Gloor, District 35, which is Grand Island, and I'm Chair of the Revenue Committee. We'll take the bills today in the order listed on the agenda posted outside the door. Some unwritten rules and written rules, for that matter, about testifying and how the process goes: These are wonderful little instruments and inventions, but they can be a distraction so please do what I'm doing--check to make sure that it's on mute or turned off--so that we don't have that disruption going on during the hearings themselves. When you're ready to testify, move, if you would, as far to the front as you can--and I understand the room is busy today; I'm glad I made that suggestion--so that we're not doing a lot of back and forth and back and forth here. The order of testifying is that the introducer of the bill, the senator who introduced it, will do an opening. We'll then go to proponents, opponents, and those in a neutral capacity. For those of you here for LB958, there has been some question about going back and forth between proponents and opponents. Frankly, I don't know that there are so many proponents for this bill that that needs to be an issue for us at this period of time. But we'll sort of play it by ear and see when the...as the afternoon goes on whether that's necessary. If it appears to be the case, we certainly, from the interest of fairness, will consider going back and forth. We need all the testifiers, if you're going to testify, to sign in. There are sign-in sheets in the back. Fill that out, be sure and hand it to Krissa, our clerk. When you sit down to testify, we need you to give us your name and then spell it out for us so that we get it accurate for the record. We are, because of the number of people who wish to speak today, working with a three-minute time limit. That means when you start the light will be green; when you have a minute left, it will go to yellow; and when it's time for you to wrap up, it will go red. Please try and wrap up as quickly as you can, and I will help you along those lines politely if necessary. If you're not going to be testifying but would like your stand on this to be known, there are also sign-up sheets in the back where you can let your stand on this particular bill be known. If you have handouts, we need 11 of those handouts. Give those to the pages and we'll get those distributed. If you just now realize you don't have 11, now would be a good time to catch the eye of the pages so we can get them making 11 copies for you. Please speak into the microphone as best you're able, and that's a bit of advice I give also as a reminder to the senators so that we're able to pick up all the comments people make. To my immediate right is committee counsel, Mary Jane Egr Edson. Kay Bergquist is the research analyst down on my right. And 1 Transcript Prepared By the Clerk of the Legislature Transcriber's Office Revenue Committee February 04, 2016 Krissa Delka is the clerk at the far end of the table and the one you want to give your sheets to. I'll ask the committee members to introduce themselves starting with Senator Scheer. [LB958] SENATOR SCHEER: Jim Scheer, District 19, which is Madison and a small portion of Stanton County. [LB958] SENATOR SMITH: Jim Smith, District 14 in Sarpy County. [LB958] SENATOR SULLIVAN: Kate Sullivan of Cedar Rapids representing District 41, a nine-county area in central Nebraska. [LB958] SENATOR SCHUMACHER: Paul Schumacher, District 22, that's Platte and parts of Colfax and Stanton Counties. [LB958] SENATOR BRASCH: Lydia Brasch, District 16, Burt County, Cuming County, and Washington County. [LB958] SENATOR GLOOR: And we'll have other senators who join us. Some of you know, some of you may not, that senators just because they're serving on this committee have other bills that come up in other committees that they need to introduce so there is some coming and going. And so I expect Senators Davis and Harr will join us when their schedule of presentation allows. So don't read anything to people coming and going, certainly as relates to your comments. We have I believe today our pages are Alex from Aurora and Brenda from Wakefield and here to help you as well as help us. With that in mind, we will start with the first bill, LB958. And I will, for a brief period of time, turn the gavel over to Senator Schumacher who will convene the meeting while I open. [LB958] SENATOR SCHUMACHER: Senator Gloor, welcome to your committee. [LB958] SENATOR GLOOR: Thank you, Senator Schumacher. You do that so well. I'm Senator Mike Gloor, G-l-o-o-r. This committee knows that I usually open the discussion on property taxes with a bit of a preface that's a historical preface. It goes back to the work done by the Revenue Committee back in 2013, and a few of you served on that Tax Modernization Committee. One of the unfinished bits of business that came out of that had to do a recommendation that we were too dependent upon property taxes to fund K-12 education and should look at state dollars going in to correct that change. And so this past interim Senator Sullivan's Education Committee, this committee sat down together and began to look at that issue specifically. And this would be an appropriate time I think to thank this committee for, and staff, for its time and effort during the 2 Transcript Prepared By the Clerk of the Legislature Transcriber's Office Revenue Committee February 04, 2016 interim. You put in a lot of time and hours and energy during a time of the year where most Nebraskans think we go into hibernation. And certainly this committee did not go into hibernation and deserves to be recognized for the work they put in during the interim. We also had an opportunity as we sat down and took a look at this issue to begin working collaboratively with the Governor and his staff, which was a great opportunity for us to share the thoughts that were coming out of our work with the Governor and his staff. And frankly, that's what we ended up with when you take a look at LB958 and the general themes that came out of that discussion, which were we do need to increase state aid to K-12 and that increase is fruitless if what happens to those additional dollars is that they end up being absorbed into budgets rather than finding their way back to property taxpayers. We can't have both working and expect that this problem ends up being resolved. This is not fixing blame. And certainly I've had a lot of discussions with a lot of individuals about this is not a blame game for us, but it's one of the realities of dealing with property tax relief. In general, here's how LB958 seeks to do that. It does not remove any funding mechanisms for local government. The legislation does tighten up spending limits on local governments, removes exceptions and places them under the levy lid. It still allows local governments to exceed levy limits with a vote of the people. Valuation--this is a 3 percent aggregate annual adjustment and not a hard cap. This means individual property owners will see a variety of different increases or decreases in property valuations from year to year. The 30,000- foot level, that's LB958. I was pleased to introduce it on behalf of the Governor. And I'll now turn this seat and microphone over to the Governor; and he'll be followed by the Property Tax Administrator Ruth Sorensen, who is here to help us with some of the more technical questions that we may have. Thank you. Good afternoon, Governor. [LB958] PETE RICKETTS: Good afternoon, Chairman. I'm Governor Pete Ricketts, P-e-t-e R-i-c-k-e-t-t- s. Let me know when I can begin. [LB958] SENATOR GLOOR: You can begin, sir. [LB958] PETE RICKETTS: All right, great. Well, thank you very much, Chairman Gloor and all the members of the committee, for the opportunity to be here today and also for all the work that you did in the interim over the summer and the fall working together with the Education Committee to really talk about these important issues we face here.