School Finance Review Commission among tax-related priority bills

School Finance Review Commission among tax-related priority bills

Several proposals related to taxation and fiscal policy are among this session’s priority bills. Bills that have priority status are generally considered ahead of other bills in debate. Individual senators can select one priority bill, committees can select two priority bills and the Speaker of the Legislature can prioritize up to 25 bills.
 
Prioritized bills that OpenSky will watch closely throughout the remainder of the session includeLB 323, which would create the School Finance Review Commission; LB 357, which would cut income taxes and transfer money from the cash reserve into the Property Tax Credit program; and LB 350, a bill to lower the taxable value of agricultural land from 75 percent to 65 percent of market value.
 
School Finance Review Commission an opportunity for meaningful change
 
LB 323 would get to the core of Nebraska’s property tax challenges in a meaningful and responsible way as it creates the School Finance Review Commission. The bill will allow Nebraskans to take a step back to review and revise our school funding formula, which was created 25 years ago. Much has changed since the formula was enacted in 1990 and a review will allow Nebraska to make changes to meet our current challenges, such as high reliance on property taxes to fund K-12 schools as well as growing socioeconomic obstacles to educational success.
 
Income tax cut bill would lead to Kansas-like scenario 
 
Our analysis showed LB 357 would lead to a budget crisis similar to the one Kansas faces, while likely causing higher property taxes and cuts to schools and other key services. Our analysis illustrated that when fully enacted, LB 357 would annually cost the state about $419 million, which is nearly half of our school funding formula appropriation for FY 14-15. Furthermore, our research noted that the vast majority of the LB 357 tax cut – 76 percent – would go to the top 20 percent of Nebraska earners.
 
It’s also worth noting that Nebraska has enacted several tax reductions in the last decade, and the majority of major tax cut legislation has focused on income taxes. The value of major tax cut packages enacted in this time period is projected to exceed $800 million per year by Fiscal Year 2023-2024 (FY24).
 
Bill to tax agricultural land at lower rate would threaten school funding
 
Our research showed LB 350 would treat taxpayers disparately in different parts of the state and would lead to revenue losses for schools, counties, cities and other localities. As legislators voted to hold the bill in the Revenue Committee for now, some said the proposal did not get to the heart of Nebraska’s property tax challenges, as it fails to address the intrinsic link between property taxes and school finance.  
 
“Good government” and Marketplace Fairness bills prioritized
 
LB 538, which would create a process to conduct ongoing review of Nebraska’s business subsidy programs, was prioritized by the Legislative Performance Audit Committee. The bill would help ensure our business subsidy programs create good-paying jobs and are a good use of taxpayer dollars.
 
The Appropriations Committee prioritized LB 33, which calls for the Legislative Fiscal Analyst to provide revenue volatility reports that will help lawmakers determine how much money is needed in the cash reserve to protect the state in economic downturns.
 
The Speaker of the Legislature has prioritized LB 200, which would divert online sales tax revenue into Nebraska’s Property Tax Credit Program should Congress pass the Marketplace Fairness Act. 
 
Other prioritized tax bills
 
Other tax-related priority bills include:

• LB 156, which changes the amount of credits allowed under the Angel Investment Tax Credit Act;
• LB 259, which limits taxation of some personal property;
• LB 356, which relates to the assessment of certain rent-restricted housing projects;
• LB 414, which would provide property tax exemptions for fraternal benefit societies;
• LB 419, which exempts sales and purchases by zoos and aquariums;
• LB 423, which makes changes to a renewable energy tax credit;
• LB 559, which relates to tax credits and insurance premiums;
• LB 591, which creates tax-free savings options for Nebraskans with disabilities; and
• LB 610, which would increase taxes on gasoline purchases to fund road repairs.

We’ll keep you updated 
 
As committee hearings wrap up and we move into full-day debate in the Legislature, changes regarding bill statuses and other issues are likely to come quickly. We will work to keep you updated on developments that arise regarding tax and education finance bills.