OpenSkyLIGHTS: Focus on Nebraska fiscal policy (3/1/24)

A

Nebraska scores an “A” on 42 factors that measure democratic governance for public schools, including the freedom to teach and learn, financial support for public education, homeschooling and privatization. The report by the Network for Public Education used data from Nebraska prior to implementation of LB 753 and notes the “clear association between privatization” and low grades in other states, including Iowa (D), Florida (F) and Arizona (F).

LB 753, which created dollar-for-dollar state tax credits for donations to private school scholarships, faces a repeal vote in November, but policymakers in Nebraska are considering another proposal to divert state dollars to private schools. LB 1402 would appropriate $25 million in FY25 for the state treasurer to distribute as grants to organizations awarding private school scholarships. The appropriation could grow by 25% annually until reaching $100 million and, if fully implemented, would direct $677 million in state funds to private schools over the first 10 years.

Read commentary from North Carolina and Kentucky governors in USA Today

$50 million

A change in how some types of Nebraska businesses pay income taxes has prompted wild swings in the state’s tax receipts, even though there is no net effect on tax revenues. Under the Pass-Through Entities Tax (PTET), taxes are first paid to the state and later returned through a tax credit.

The policy change, enacted in LB 754 last year, is retroactive to 2018, and with the timing of payments to the state and associated refunds expected to span fiscal years, the Nebraska Economic Forecasting Advisory Board raised its revenue projection for the current fiscal year by $575 million and lowered its projection for FY25 by $525 million. The resulting $50 million increase represents 0.4% of net tax revenues projected across the biennium and offers little in addressing the decline in future state revenues resulting from income tax cuts passed last year.

11%

Thin profit margins and high interest rates did little to slow growth in agricultural land values in 2023. According to the Federal Reserve Bank of Kansas City, the value of nonirrigated cropland across the seven-state district including Nebraska increased by 11% in the fourth quarter when compared to a year ago.

Number crunching

2.46: To no surprise, it appears border bleed extends to alcohol sales. Delaware, where taxes on alcohol are low, sold 2.46 gallons of spirits per person in 2023, considerably more than any other state. Nebraska ranked 45th in per-capita alcohol sales (0.78 gallons).
22.4 million: The number of American households considered to be rent-burdened — meaning they spend more than 30% of their income on rent – reached an all-time high in 2023. In Nebraska, 43.5% of renters are considered to be rent-burdened.
31.9%: Of 342 companies studied, 109 – or 31.9% – paid zero in federal corporate taxes in at least one of the five years since the Tax Cuts and Jobs Act passed in 2017. In the years where they avoided taxes, the companies reported combined profits of $258.1 billion.

Register for Wednesday webinar

Join OpenSky for our next legislative webinar on Wednesday, March 6. We will highlight a discussion about revenue caps and the implications for local government services and share some exciting news about a new resource that OpenSky is launching.

We’re excited to welcome Sen. Jana Hughes (LD 24) to kick off the webinar, which begins at noon. The webinar will feature a conversation with Jennifer Hiebner, a member of the Board of Education for Heartland Community Schools in Henderson, Nebraska, and Dick Lavine, a senior fiscal analyst for Every Texan, where his focus is on state and local revenue systems.