It’s another busy week for OpenSky in front of several committees. Hearings will conclude on March 28, and we will move into full-day floor debate. We were given some strong indicators of how floor debate will progress as senators selected their personal priority bills last week and Speaker John Arch selected Speaker priorities as well.

LB 652 – Introduced by Senator Ben Hansen, this legislation would terminate the Board of Educational Lands and Funds, which is land held by the state in a trust that generates additional income for education. The state-owned land is primarily leased by agricultural producers and the rental revenue is apportioned out to each district based on a census of school-aged children who live in the district. Senator Hansen proposes the state sell the land and use the one-time cash infusion for property tax relief. Once those funds are depleted, state aid would increase for equalized schools, and non-equalized school districts would have to rely more on property tax to fund the needs of their students. OpenSky sent a letter in opposition to this proposal as we believe the short-term property tax relief would not outweigh the long-term benefits of a sustainable funding source for schools.

LB 130 – Introduced by Senator George Dungan and heard in the Appropriations Committee, LB 130 helps maintain a well-funded cash reserve, which is critically important to maintaining the fiscal health of the state. The reserve is one of the best hedges against the worst effects of an economic downturn, supplementing state General Funds when revenues decline. The legislation provides the opportunity to ensure the reserve remains well funded, by sending revenue collected over the certified forecast at the end of a fiscal year to the reserve, prioritizing saving before other spending. Research Director Craig Beck testified in support of the measure.

LR 13CA – Introduced by Senator Bob Hallstrom, the legislation is another attempt to prohibit the levying of an inheritance tax in Nebraska. If successful, LR 13CA would put the measure to a vote of the people. Inheritance taxes provide critical revenue for county governments, and without identifying replacement revenue, elimination of this revenue would result in reduced services, property tax increases, or both. Dr. Rebecca Firestone testified in opposition to this measure.

LB 283 – Introduced by Senator Ashlei Spivey, would implement Express Lane Eligibility (ELE), which would streamline Medicaid re-enrollments, currently required every 12 months. The administrative work required to re-enroll often results in people dropping off of Medicaid and then eventually back on, commonly called churn. Our estimates based on available data suggest this churn leads to $3 to 5 million dollars in excess administrative costs. ELE would ease some administrative burden and allow automatic initial applications and renewals for Medicaid and CHIP using SNAP data to verify eligibility. Trevor Toteve, Policy Analyst, testified in front of the Health and Human Services Committee in support of the measure.

LB 169 and LB 170 – Introduced by Senator Tom Brandt, LB 169 would eliminate a number of sales tax exemptions currently in place on goods and services ranging from swimming pool cleaning to dating services. LB 170 specifically targets current exemptions on pop and candy. The additional revenue raised from removing these exemptions would be directed to the state’s General Fund, which would be used at the discretion of the legislature through the appropriations process. OpenSky has long supported the idea of expanding the sales tax base to include more services and then using the revenue raised to lower the sales tax rate in order to limit its regressive effects, and to help update Nebraska’s tax code to better suit our modern economy. As such, we sent a letter in support of LB 169. However, a tax on candy and pop is likely to follow the same pattern as other “sin taxes”, where higher taxes result in lower consumption, so they may not be sustainable as revenue sources. For that reason we took a neutral position on LB 170. Both pieces of legislation were given priority designation, which means they will be scheduled for General File debate when they advance from committee.

LB 171 – Also introduced by Senator Tom Brandt, this bill would simply pause the top personal and corporate income tax rates at 4.99% until the Legislature can revisit their impact and navigate the state’s current budget deficit. A top rate of 4.99% puts us well within range of our neighboring states. Kansas is at 5.58%, Missouri at 4.7%; South Dakota and Wyoming are different but they have significant natural resources and thus very different economies from ours. While we generally view rankings with caution based on methodological concerns, we’d note the Tax Foundation state tax competitiveness rankings also have us ranked at 24, up from 28 in 2024. This puts us right in the middle of the pack, a great place to be given our small population and the structure of our economy. Dr. Firestone testified in support of the bill in the Revenue Committee.

LB 28 and LB 30 – Both introduced by Senator Danielle Conrad, these measures were heard together in the Revenue committee and would eliminate income taxes on wages earned through tips and overtime pay, respectively. Supporting working families is core to OpenSky’s mission, but we submitted letters in opposition for each bill. We are concerned that creating loopholes for certain types of income is rife for abuse, such as reclassifying some workers as tipped employees as a means to facilitate tax avoidance. There are already tested policies that would achieve the goal of supporting our working families who rely on tips to make ends meet. Two examples include increasing Nebraska’s Earned Income Tax Credit (EITC), as proposed in Senator Bostar’s LB 710, and implementing a state Child Tax Credit, as proposed in Senator Conrad’s LB 157.

WEBINAR

Join us for a conversation with Supplemental Nutrition Assistance Program experts Katie Nungesser from Voices for Children in Nebraska, Tim Williams from Food Bank for the Heartland, Tim Klipp-Lockhart from Food Research & Action Center, and community advocate Jennifer Solano for a webinar taking a deep dive into the importance of SNAP in Nebraska. Together, we will break down the SNAP basics, and give you the tools you need to engage with your community leaders at this pivotal moment for our state. Click here to register.