The OpenSky team was busy again last week, including our first engagement with the Appropriations Committee this session on the biennium budget. Our slate is full again this week and we look forward to continuing to work with all stakeholders as the session continues. 

LB 261 and 264 – Research Director, Craig Beck, testified in opposition during the combined hearing for these two pieces of legislation. Testimony outlined some positives, including maintenance of the Cash Reserve Fund, which has been a source of transfers in an effort to balance the budget in recent sessions. However, our opposition ultimately centered around a lack of sustainability in the proposal. We estimate the state would need nominal revenue growth of more than 6.5% over the coming biennium just to cover the shortfall; but revenue growth is currently estimated at just under 5%. This lagging growth is in part due to income tax cuts enacted in recent years. Additionally, we are concerned about a lack of transparency in how the proposal approaches property tax spending. Though General Fund appropriations are increased over the biennium in the committee preliminary report, that increase does not take into account existing spending on property taxes. That’s because this spending is not classified as an appropriation, but rather, as a “transfer,” even though it comes from the same pot of money as the General Fund. We anticipate significant continued discussion on the budget. 

LB 710 – Introduced by Senator Eliot Bostar, this legislation expands the Earned Income Tax Credit (EITC) from its current 10% of the federal credit amount to 20%. The EITC has a robust body of research behind it that indicates increasing low-income families’ earnings via the EITC both improves their immediate well-being and promotes positive long-term outcomes. For instance, the EITC brought 5.6 million people out of poverty nationwide in 2018, including 3 million children, and reduced the severity of poverty for an additional 16.5 million people, including 6.1 million children. EITC funds are typically spent on household needs, making them economically beneficial for the state as well. Studies from other states estimate that every $1 of spending from EITC benefits generates between $1.50 and $2 worth of local economic activity. OpenSky Policy Fellow and EITC expert, Elias Pritza testified on the bill in strong support. 

LB 328 – Introduced by Senator Rick Holdcroft would remove the current allocations from the Documentary Stamp Tax, except for county governments. As a Strategic Housing Council Pillar 1 member, we oppose the removal of this critical funding source for the Affordable Housing Trust Fund (AHTF), a recipient of Documentary Stamp Tax allocations. The AHTF is one of the state’s most important programs to address what has become an acute affordable housing shortage. Ninety-five cents of every $2.25 levied through the Documentary Stamp Tax is currently allocated to the fund. This is the only recurring funding source for the program, providing revenues averaging about $15.7 million per year for each of the last three years. The loss of funding would put a significant onus on the state to fund affordable housing, for which there is little room in the upcoming biennial budget. For these reasons, OpenSky submitted a letter in opposition to LB 328.

Coming This Week

OpenSky will be present to offer testimony asking the Appropriations, Education and Revenue Committees to avoid overriding the will of the people of Nebraska as they consider several proposals to defer tax revenues for private education scholarships, vouchers, savings accounts and more. Nationwide, such programs have decimated state budgets and demonstrated poor outcomes for students. We will testify in opposition to LB 624, LB 557, LB 633, LB 131 and LB 427. We will also offer opposition testimony on several bills in the Revenue Committee, including LB 81 and LB 424, both property tax proposals. We will also oppose two bills in the Health and Human Services Committee, LB 379 and LB 656, both of which provide burdensome and ineffective obstacles to social support programs. We will also support LB 14, which provides free school meals for all Nebraska students.