Bills related to Nebraska’s early childhood education workforce, property taxes, social security tax cuts and a Constitutional Convention measure will be discussed during a busy fiscal-policy week in the Legislature.
Bill aims to bolster early childhood workforce
LB 838 – which will be the focus of an Education Committee hearing on Tuesday – would allocate $15 million a year to help Nebraska strengthen its early childhood education workforce. Many experts, including Dr. Timothy Bartik of the W.E. Upjohn Institute for Employment Research, note that investments in early childhood education are among the most effective economic development measures states can take. The bill intends for the dollars to come from the state’s general fund to support the initiative but it does not specify a dedicated revenue source, which could create sustainability concerns in the future when the state is in a different fiscal position.
LB 1107 credit changes
Two measures before the Revenue Committee on Wednesday – LB 688 and LB 723 – would make changes to the LB 1107 refundable income tax credit for property taxes paid. LB 688 would transform the credit to more closely resemble the Property Tax Credit program, which reduces property tax bills as opposed to lowering income taxes. This would be done in an effort to make LB 1107’s property tax relief more transparent and easier to access for taxpayers. Media reports from the fall indicated that about 40% of the LB 1107 credit went unclaimed in its first year, in part because some taxpayers found accessing the credit burdensome or simply were not aware that the credit existed.
LB 723 would prevent the funding level for the LB 1107 credit from dropping below its current level of $548 million per year. The measure creates sustainability concerns as it could leave Nebraska vulnerable to cuts to schools and other priorities, particularly when the federal relief dollars that are currently bolstering our economy stop flowing into the state.
Social Security exemption raises multiple concerns
A third bill that will be heard by the Revenue Committee on Wednesday is LB 825, which would exempt all Social Security income from taxation. The majority of Social Security income in Nebraska already is untaxed. The exemption proposed in LB 825 would predominantly benefit wealthy retirees and simultaneously reduce revenue needed for services that many Nebraska seniors need.
Constitutional Convention debate continues
On Thursday morning, second round legislative debate will likely be held on LR 14 – which would have Nebraska join a list of states calling for a Constitutional Convention to enact fiscal restraints on the federal government, enact congressional term limits and limit the power and jurisdiction of the federal government. LR 14 was the focus of a recent OpenSky webinar, during which panelists discussed the dangers of Constitutional Convention proposals. LR 14 also was the focus of a recent op-ed by former state senators Kathy Campbell, Mike Gloor and John Harms. They wrote that the balanced budget amendment sought by LR 14 supporters threatens our state and national ability to respond to emergencies like the COVID-19 pandemic.
Revenue growth caps fail to get to the heart of property tax issue
The Revenue Committee on Thursday will hold hearings on a pair of bills – LB 986 and LB 987 – that would cap growth in school property taxes. These types of caps can harm funding for schools and they fail to get to the heart of Nebraska’s real property tax issue – low state support for K-12 education and other local governments.
Nebraska Public Media will stream all legislative debate and hearings live.