Recapping the 2018 legislative session

Recapping the 2018 legislative session

As the 2018 legislative session concludes, we want to take a look back at some of the main developments in the state’s fiscal debate and to look ahead at what is on the horizon.

Property tax debate stalls 

Property taxes were a major focal point this session as several measures were proposed offering differing solutions to lower property taxes. Despite a late-session summit convened by the Speaker of the Legislature with the sponsors of major tax proposals to find a compromise, lawmakers were unable to coalesce around a path forward. A key sticking point in the property tax debate was whether or not a plan should include new revenue sources to fund property tax relief.

A proposal that did call for new revenue was LB 1084, many components of which were proposed to be amended into LB 1103 for debate by the full Legislature. The new revenue in LB 1084 would have been used to reform to our K-12 funding system and provide significant property tax relief. OpenSky supported this measure, as did several lawmakers, but it did not advance.

Two other measures — LB 947 and LB 829 — did not offer ways to offset the revenue loss, and would have forced lawmakers to make major cuts to health care, education and other state services or to increase revenue down the road, like Oklahoma and Kansas. Both bills offered taxpayers income tax credits to offset a certain amount of property taxes paid, and LB 947 also prioritized corporate income tax cuts despite the fact that corporations are receiving major tax breaks from the recently-passed federal tax cuts. LB 947 received three hours of floor debate before being tabled for the session. LB 829 never advanced from the Revenue Committee but supporters of the bill are now collecting signatures in an effort to have voters decide in November whether to enact the measure.

OpenSky among many groups opposed to the property tax ballot initiative

OpenSky opposed LB 829 and opposes the tax credits proposed in the ballot initiative because it would blow a $1 billion plus hole in the state budget. This is equal to approximately one quarter of our state’s general fund budget and would result in major damage to health care, education, public safety and other vital services that are essential to our state and its economy.  Many other groups, including business, health care and education organizations as well as many elected officials oppose the measure because it would result in significant cuts to critical services and require raising taxes or fees.

Transparency measures become law

Transparency regarding tax expenditures was the key theme of LB 874 and LB 936. LB 874 makes changes such as requiring cities to conduct and publicize analyses about a project’s qualifications for TIF, as well as the fiscal impact on local schools. LB 936 improves the information available to audit the state’s main tax incentive program, Nebraska Advantage. The measures will help policymakers gain a better understanding of the impact of TIF and tax incentives to help ensure these tax expenditures are effective investments for state and local governments.

Scholarship tax credit and Constitutional Convention measures halted as well

Two measures that OpenSky opposed that did not advance past the first round of debate were LB 295 and LB 1058. LB 295 would have created tax credits for donations to private school scholarship programs. We showed how the bill would let donors profit by way of the tax code, while also creating a new and growing tax expenditure at a time when the Legislature has made a series of cuts to the state budget.

LB 1058 related to efforts to call an Article V Convention of the States to pass fiscal restraints and other drastic federal changes. The bill aimed to allay fears of a “runaway convention” by prohibiting Nebraska Convention of States delegates from acting beyond the issues the convention was called to address. We noted, however, that the bill would only prevent Nebraska’s delegates, not those from other states, from working beyond the call, and that even if delegates worked within the call, they still could make dramatic changes such as eliminating the federal income tax or the U.S. Department of Education.

Internet sales tax bill fails to advance

We were disappointed that LB 44 stalled on the final round of debate. The bill would have required that large companies provide detailed notifications to purchasers about the state sales tax that is due for their purchases, as well as prepare Nebraska to collect sales tax on internet purchases should an upcoming U.S. Supreme Court ruling permit states to do so. Without LB 44, Nebraska may have to wait until the next legislative session to start collecting sales taxes on online purchases should the Supreme Court ruling give states that ability.

Special session effort concerning

We are concerned about a push to call a special legislative session to lower property taxes. Among the many concerns we have with this proposal is that it provides very little time to address a very complex issue, and that the call, which is very narrow and limited to reducing property taxes, would restrict the solutions that could be put forward. Media reports indicate that there likely is not enough support among lawmakers to enact a special session.

Some dates for your calendar! 

We have a couple dates for you to save! On Thursday, May 31, OpenSky will again participate in Give to Lincoln Day. Donations to OpenSky on Give to Lincoln Day help us access a portion of a matching fund offered by the Lincoln Community Foundation. Donating to OpenSky on Give to Lincoln Day is a great way to maximize your support of our mission.

Also, we will host our fourth-annual Fall Policy Symposium on Wednesday, Sept. 5 at Nebraska Innovation Campus in Lincoln. We will have more details about the event as it gets closer.

We will be in touch again throughout the interim to keep you updated on our state’s fiscal debate. Until then, we thank you for your interest in OpenSky and these vital issues.