The following is the fifth part of a committee-by-committee recap of the Nebraska Legislature’s 2020 session compiled by the Nebraska Unicameral Information Office. 

This session recap will run throughout this week. Part I covers Agriculture; Appropriations; Banking, Commerce and Insurance; and Business and Labor. Part II covers Education; Executive Board; General Affairs; Government, and Military and Veterans Affairs. Part III covers Health and Human Services. Part IV covers Judiciary; Natural Resources; and Retirement Systems. Part V covers Revenue; Transportation and Telecommunications; and Urban Affairs. Find the complete recaps at update.legislature.ne.gov.

Revenue

The Revenue Committee this session advanced a major proposal that includes a new tax credit based on the amount of property taxes paid to a taxpayer’s school district, a new business tax incentive program and a requirement to provide matching funds for a potential project at the University of Nebraska Medical Center.

Tax Package

LB 1107, introduced by Norfolk Sen. Jim Scheer, contains numerous provisions.

The bill creates a refundable income tax credit based on the amount an eligible taxpayer paid in property taxes to their school district during the previous year, not including those amounts levied for bonded indebtedness or a levy override. The credit is allowed to each individual, business or other entity that pays school district taxes.

For calendar year 2020, the total amount of credits is limited to $125 million. For the following three years, that amount could increase based on growth in the state’s net tax receipts and the level of its cash reserve.

The credit cap will increase to $375 million in 2024. For each year after that, the total amount of credits will be $375 million plus an allowable growth percentage equal to the growth in real property value, not to exceed 5% in any one year.

Another provision ensures that the state’s cash reserve could not drop below $500 million after any transfer of funds to the new program.

LB 1107 also creates a new business tax incentive program, the ImagiNE Nebraska Act. The application period for the state’s current program, the Nebraska Advantage Act, ends this year.

Sen. Mark Kolterman of Seward introduced the original proposal, LB 720, last session. Under LB 1107, qualifying businesses will receive a varying combination of incentives based on their level of capital investment and the number of employees they hire at a minimum qualifying wage.

To qualify for sales and use tax incentives under the act, a taxpayer must offer full-time employees the opportunity to enroll in minimum essential health care coverage under an employer-sponsored plan and offer a “sufficient package of benefits.”

The director of the state Department of Economic Development may not approve applications that would include refunds or credits for a calendar year in which a “base authority” is projected to be exceeded.

Base authority is $25 million for calendar years 2021 and 2022, $100 million for 2023 and 2024 and $150 million for 2025.

Beginning in 2026, the director will adjust the base authority every three years to an amount equal to three% of the state’s general fund net receipts for the most recent fiscal year. Unused base authority will carry forward to the following year, but base authority prior to 2026 may not exceed $400 million.

The bill requires the director and the state tax commissioner to submit an annual report to the Legislature listing the tax incentive agreements signed in the previous year, the agreements still in effect, the identity of each taxpayer who is party to an agreement, the qualified location or locations and other information.

LB 1107 also includes the amended provisions of Kolterman’s LB 1084, which requires the state to provide $300 million in matching funds for a potential academic hospital and all-hazards disaster response facility at the University of Nebraska Medical Center.

The state will not provide matching funds unless the applicant’s project has been selected for participation in the federal program and $1.3 billion in federal funds and private donations have been received.

In no case will matching funds be transferred before fiscal year 2025-26 or before the total amount of credits granted annually under the Nebraska Property Tax Incentive Act reaches $375 million.

Under LB 1107, the state will grant $275 million in credits each year under the Property Tax Credit Relief Act, which uses state sales and income tax revenue to provide Nebraskans with credits meant to offset part of what they pay in local property taxes.

The bill includes provisions meant to encourage “key employers,” or those with at least 1,000 equivalent employees during the base year, to retain jobs in Nebraska when new owners of those companies are considering moving all or some of those jobs out of the state.

LB 1107 directs the state Department of Economic Development to create and administer a revolving loan program for workforce training and infrastructure development expenses incurred by ImagiNE Act applicants. It also creates a fund to be administered by the department to provide grants to employers for reimbursement of job training expenses.

Finally, the bill provides a refundable income tax credit to Nebraska businesses that produce renewable chemicals made from agricultural products and repeals a tangible personal property tax exemption.

LB 1107 passed on a vote of 41-4.

Property Tax

The committee advanced two other proposals meant to reduce local property taxes, but neither mustered enough support to advance from the first round of debate.

LB 974, introduced by the committee, would have reduced property valuations for school tax purposes over three years – thereby reducing the amount of property taxes they collect – while increasing state aid to schools via a new foundation aid component. It also included provisions intended to limit school budget and spending growth.

After three hours of general file debate, the Legislature moved to the next item on its agenda without voting on the committee amendment or the bill.

The committee later advanced a modified version of the proposal in the form of a committee amendment to LB 1106, also introduced by Scheer. It, too, was taken off the agenda after three hours of first-round debate.

Sales and Use Tax

A bill that would have turned back a portion of the state sales tax collected on water and sewer services to help cities and utilities pay for infrastructure upgrades stalled on first-round debate.

LB 242, as introduced by Omaha Sen. Brett Lindstrom last session, would have required the state to pay each political subdivision, sewer utility or water utility a percentage of the 5.5% state sales tax imposed and collected on sewer and potable water fees charged by those entities.

A committee amendment would have replaced the bill and corrected a drafting error regarding the proposed turnback rates.

After three hours of debate over two days, the Legislature moved to the next bill on the agenda before voting on the committee amendment or LB 242.

State sales and use tax imposed on the sale or lease of aircraft would have been used to maintain Nebraska’s airports under a bill advanced by the committee on a 6-2 vote.

LB 1033, introduced by Sen. Curt Friesen of Henderson, would have required the state tax commissioner to credit an amount equal to the state sales and use tax imposed on the sale or lease of aircraft to a new capital improvement fund administered by the state Department of Transportation.

The bill was not scheduled for first-round debate.

Income Tax

Individuals may exclude half of their military retirement benefit pay from state income tax under a bill passed by lawmakers on a vote of 46-0.

Previously, individuals could, within two years after their retirement from the military, choose from two options to exclude military retirement benefit pay from state income tax.

LB 153, introduced last session by Gordon Sen. Tom Brewer on behalf of Gov. Pete Ricketts, repeals those options and instead allows individuals to exclude 50% of their military retirement benefit income to the extent included in federal adjusted gross income.

The exclusion is for taxable years beginning or deemed to begin on or after Jan. 1, 2022.

Self-employed child care providers may apply for a state income tax credit under a bill approved by lawmakers on a vote of 47-0.

Under the 2016 School Readiness Tax Credit Act, eligible staff members who are employees of child care and early childhood education programs participating in the Step Up to Quality child care program may apply to the department for a refundable state income tax credit of up to $1,500.

LB 266, introduced by Lindstrom last session, adds self-employed individuals providing services for eligible child care and early childhood education programs to the definition of “eligible staff member,” allowing them to apply for the credit.

The bill also requires the state Department of Education to include those self-employed individuals in the Nebraska Early Childhood Professional Record System.

Finally, the bill allows credits awarded to passthrough entities to be distributed in the same manner and proportion as income.

Lawmakers voted 47-0 to pass a bill allowing Nebraskans to deduct employer contributions to their state college savings accounts from their state income taxes.

Under LB 1042, introduced by Sen. Andrew La Grone of Gretna, an individual’s federal adjusted gross income will be reduced by the amount of any contribution made by the individual’s employer into the individual’s Nebraska educational savings plan trust account.

The deduction is for taxable years beginning on or after Jan. 1, 2021, and may not exceed $5,000 for those married filing separately or $10,000 for other filers.

The bill prohibits any state agency that provides benefits or aid to individuals based on financial need from taking employer contributions into account when determining an individual’s income.

Additionally, LB 1042 eliminates the provision in current law that allows only an account’s participant, or registered owner, to take a state income tax deduction equal to contributions they make to their account, within certain limits.

The bill also allows the state treasurer to credit private qualified contributions to the Meadowlark Endowment Fund or to accounts opened under the Meadowlark Program at the direction of the donor.

Lawmakers debated a proposal to decouple Nebraska’s tax code from a federal change intended to help businesses weather the economic effects of the coronavirus pandemic.

LB 1074, sponsored by Elkhorn Sen. Lou Ann Linehan, would have made several technical corrections to state tax law requested by the state Department of Revenue.

Sen. Sue Crawford of Bellevue introduced an amendment on general file that would have decoupled Nebraska’s tax code from a provision in the Coronavirus Aid, Relief and Economic Security Act passed by Congress in March. Because Nebraska conforms to federal tax law on a rolling basis, it automatically incorporates changes made at the federal level.

The provision temporarily removes an excess business loss limitation for passthrough entities, reducing state income tax revenue.

After several hours of general file debate, the Legislature adjourned without voting on Crawford’s amendment or the bill.

The committee advanced another bill that would have allowed taxpayers to direct state income tax refunds to their Nebraska educational savings plan trust accounts.

As amended, LB 865, introduced by Omaha Sen. Justin Wayne, would have required the state tax commissioner to include space on the individual income tax return form, beginning with tax year 2021, in which the taxpayer could have designated any amount of a refund as a contribution to their account.

LB 865 also would have modified the definition of “matching contribution” for purposes of a program in which the state treasurer provides incentive payments to employers that make matching contributions to employees’ NEST accounts.

Lawmakers voted 38-0 to advance the bill to select file, but it was not scheduled for subsequent debate.

The committee voted 8-0 to advance a proposal to provide an income tax deduction to Nebraska businesses that employ individuals convicted of a felony, but it was not scheduled for general file debate.

Under LB 805, also introduced by Wayne, an individual’s federal adjusted gross income – or a corporation’s federal taxable income – would have been reduced by 65% of the wages paid to an individual who has been convicted of a felony in any state.

Transportation and Telecommunications

Measures expanding broadband access, easing motor vehicle restrictions and addressing emerging technologies were considered by the Transportation and Telecommunications Committee this session.

Telecommunications

Expansion of broadband internet service in Nebraska was a priority for committee members this session.

LB 992, introduced by Henderson Sen. Curt Friesen, creates a new position of state broadband coordinator within the office of the state chief information officer.

Among other duties, the coordinator will encourage counties to appoint a broadband planning coordinator to assist counties in determining available broadband assets and explore the creation of broadband cooperatives in unserved or underserved areas of the state.

The bill allows an electric utility and a commercial broadband supplier to enter into an agreement for the use of an electric utility easement or certain electric utility infrastructure to install, maintain or own certain attached equipment for operation by a commercial broadband supplier.

In entering into an agreement, an electric utility may not discriminate among commercial broadband suppliers in offering or granting rights to install or attach certain broadband equipment.

LB 992 requires electric utilities to charge fees that are nondiscriminatory and requires the Nebraska Public Service Commission to establish a matching fund program to provide incentives for the deployment of fiber-optic cable to benefit public libraries.

Additionally, LB 992 changes current law allowing a state agency or political subdivision to lease its unused fiber-optic cable to certain telecommunications carriers. Before a dark fiber lease becomes effective, it must be filed with the commission, which will cause notice of the lease and lease rates to be published.

The bill requires the commission to establish a safe harbor range of market rates for all dark fiber leases using a competitive price determination comparison.

Under LB 992, 50% of the profit earned by an agency or political subdivision under certain dark fiber leases must be remitted to the Nebraska Telecommunications Universal Service Fund. The provision does not apply to a lease or a portion of a lease of dark fiber leased to exclusively serve unserved locations.

Finally, the bill provides that Nebraska Rural Broadband Task Force members appointed by the governor will serve two-year terms and may be reappointed.

LB 992 passed 47-0.

LB 996, sponsored by Plymouth Sen. Tom Brandt, allows Nebraska to create a statewide crowdsourcing program to collect broadband availability data to supplement federal data that already is collected.

The bill prioritizes resources and outreach in areas of the state that crowdsourcing, public feedback and other evidence suggests are unserved or underserved by high-speed internet.

The bill passed 47-0 and took effect immediately.

Licensing and Administration

Lawmakers approved the committee’s technical omnibus bill, LB 944. Introduced by Lincoln Sen. Suzanne Geist, it allows owners to seek a refund on vehicle registration if a vehicle is lost to natural disaster.

The bill also allows the state Department of Motor Vehicles to discontinue issuance of certain specialty license plates if less than 500 new and renewal applications are received in any consecutive two-year period. The current threshold is 200.

LB 944 includes provisions of five bills authorizing new license plates:

• LB 843, introduced by Omaha Sen. Machaela Cavanaugh, which provides for “Donate Life” license plates;

• LB 903, introduced by Omaha Sen. Rick Kolowski, which provides for Down syndrome awareness license plates;

• LB 921, introduced by Omaha Sen. Robert Hilkemann, which provides for “The Good Life is Outside” license plates;

• LB 942, introduced by Omaha Sen. Megan Hunt, which provides for “Support the Arts” license plates; and

• LB 1139, introduced by Lincoln Sen. Anna Wishart, which provides for “Pets for Vets” license plates.

Additionally, provisions of the following six bills are incorporated in LB 944:

• LB 768, introduced by Thurston Sen. Joni Albrecht, which incorporates updated federal regulations related to cabin trailers, low-speed vehicles, handicapped parking, vehicle registration and driver licenses and state identification cards, among others;

• LB 785, introduced by Henderson Sen. Curt Friesen, which provides length, weight and load capacity exceptions for stinger-steered automobile transporters, towaway trailer transporter combinations, battery-powered vehicles, emergency vehicles and certain heavy-duty tow and recovery vehicles;

• LB 831, introduced by Brainard Sen. Bruce Bostelman, which allows the state DMV to issue a salvage title for a vehicle manufactured prior to 1940 if it previously was titled as “junk;”

• LB 976, introduced by Lincoln Sen. Kate Bolz, which adds neurological impairment to the list of criteria eligible for handicap parking passes within the exiting 200-foot mobility impairment standard;

• LB 983, introduced by Bellevue Sen. Sue Crawford, which eliminates the one-point deduction from a person’s driver license for a speeding violation of up to five miles per hour over the speed limit; and

• LB 1067, introduced by Bayard Sen. Steve Erdman, which allows all-terrain and utility-type vehicles to cross controlled-access highways of more than two marked lanes, if used for agricultural purposes.

LB 944 passed on a 48-0 vote and took effect immediately.

Friesen introduced LB 961, which would have imposed insurance and tax regulations on peer-to-peer car sharing programs, which connect consumers who temporarily want to use a vehicle with an eligible vehicle owner.

Under the bill, a peer-to-peer car sharing program would have assumed the liability of the vehicle owner for any bodily injury or property damage to third parties, uninsured and insured motorist benefits and personal injury prevention protection losses for the time period during which the vehicle was shared.

The bill was advanced to general file on an 8-0 vote but was not scheduled for debate.

LB 761, sponsored by Adams Sen. Myron Dorn, would have increased an existing “50 Cents for Life” motor vehicle registration fee by 50 cents, which would bring the fee to $1 each year.

The additional revenue would have funded Simulation in Motion, a University of Nebraska Medical Center training simulation that prepares first responders and emergency medical technicians in rural Nebraska.

The bill failed to advance from committee.

Rules of the Road

Farmers have expanded transportation options under a bill approved by lawmakers.

Currently, the state Department of Transportation, Nebraska State Patrol or local authorities can issue permits authorizing a person to move objects greater than maximum weight and load limits set in state law.

One of these permits allows a person transporting grain to exceed vehicle weight limits by 15% and length limits by 10% to transport grain from the field to storage, market or stockpile in the field or from stockpile to market or factory when failure to do so would mean economic loss.

LB 931, sponsored by Hastings Sen. Steve Halloran, expands the permit to apply to transport of grain directly from farm storage to market. The bill also allows single-axle trucks to exceed single axle and gross weight by up to 15% for transport from farm storage to market or factory, up to 70 miles.

The maximum load of seasonally harvested grain is increased for tandem axle, group of axles or on the gross weight by 15% for transport from farm storage to market or factory without a permit.

LB 931 passed on a 46-0 vote.

Urban Affairs

Proposals to address blighted property, affordable housing needs and municipal law were among the topics taken up by the Legislature this session.

Housing and Development

Senators passed bills to encourage the development of affordable housing and help cities across the state address problem properties.

LB 866, sponsored by Omaha Sen. Justin Wayne, adopts the Municipal Density and Missing Middle Housing Act. The bill incentivizes affordable housing projects by requiring affordable housing action plans in certain cities.

The bill requires cities with populations greater than 20,000 to submit a report every two years, beginning July 1, 2021, to the Urban Affairs Committee detailing their efforts to incentivize affordable housing.

All cities with populations greater than 50,000 will be required to adopt an affordable housing action plan by Jan. 1, 2023, and all cities with populations between 20,000 and 50,000 will be required to adopt a plan by Jan. 1, 2024.

LB 866 also includes provisions of LB 1155 that create the Middle Income Housing Investment Fund within the state Department of Economic Development to support development of workforce housing in Nebraska counties of 100,000 or more residents.

Only nonprofit organizations may apply for grants, which will be based on a demonstrated need for additional owner-occupied housing in communities with an unemployment rate higher than the state average.

The fund will receive a one-time, $10 million general fund transfer. Any grants awarded will require one-to-one matching funds.

LB 866 passed on a 31-7 vote.

A bill that provides more options for the use of land banks passed this session.

LB 424, introduced by Grand Island Sen. Dan Quick, allows any municipality in Nebraska to join an existing land bank – a tax-exempt political subdivision that acquires, manages and develops vacant and tax-delinquent properties – under the Nebraska Municipal Land Bank Act.

Metropolitan and primary class cities are allowed to create stand-alone land banks under the bill.

LB 424 contains a number of safeguards, including provisions that:

• prohibit a land bank from issuing bonds;

• prevent a land bank from investing in a property that financially could benefit a board member, their businesses or their immediate family members;

• limit the total number of parcels that a land bank may own;

• expand land bank reporting requirements;

• prevent a land bank from receiving property tax revenue from an agreement under the Joint Public Agency Act;

• prohibit a land bank from temporarily holding real property for a nonprofit corporation or private entity in most cases; and

• allow an entity that creates or joins a land bank to withdraw from the agreement by a two-thirds vote of the governing body.

The bill passed on a vote of 31-12.

North Platte Sen. Mike Groene’s LB 1021 creates an expedited review process of tax-increment financing for certain redevelopment projects under the state’s Community Development Law. If authorized by the governing body of a municipality, a project will qualify for expedited review if it:

• involves repair, rehabilitation or replacement of an existing structure in an existing substandard and blighted area;

• is in a county with a population of less than 100,000;

• involves a structure that is at least 60 years old; and

• does not exceed $250,000 for a single-family structure, $1 million for a multi-family or commercial structure or $10 million for a structure on the National Register of Historic Places.

The bill passed 49-0.

Other Measures

Senators also passed an omnibus bill that makes several changes to state law governing cities and villages.

LB 1003, introduced by Sen. Lynne Walz of Fremont, allows any second class city or village to annex land, lots, tracts, streets or highways to relocate all or part of a city or village because of catastrophic flooding, while waiving a requirement that annexed areas be contiguous or adjacent and urban or suburban in character.

Such annexation will require a two-thirds vote of either the city council or the village board.

The bill, passed 42-1, includes provisions of eight other measures:

• LB 795, introduced by Lincoln Sen. Matt Hansen, which amends the Enterprise Zone Act to define unemployment criteria;

• LB 799, introduced by the Urban Affairs Committee, which makes technical changes to statutes covering primary class cities;

• LB 801, also introduced by the committee, which makes technical changes to the Community Development Law related to tax-increment financing;

• LB 821, introduced by Sen. Tom Brewer of Gordon, which allows the planning commission of a first or second class city or village to cancel a quarterly meeting if there is no business pending;

• LB 885, introduced by Lincoln Sen. Kate Bolz, which changes requirements for grants under the Civic and Community Center Financing Act;

• LB 957, introduced by Walz, which allows a mayor of a first or second class city to be considered a member of the town’s city council to establish a quorum if the council consists of four members;

• LB 984, introduced by Omaha Sen. Megan Hunt, which requires vacancies on airport authority, metropolitan transit authority, land bank, riverfront development authority boards and housing authority boards to be filled within six month after the date of the vacancy; and

• LB 993, introduced by Kearney Sen. John Lowe, which allows cities with a population between 10,000 and 25,000 to expand the size of their city council from five to seven members under the City Manager Plan of Government Act.

LB 870, introduced by Bellevue Sen. Sue Crawford, allows cities and villages to borrow directly from a financial institution to repair or rebuild property or restore public services damaged or disrupted by a natural disaster.

The bill, approved 48-0, limits direct borrowing to 20% of the annual budget of a second class city or village or 10% for a first, primary or metropolitan class city.

The Urban Affairs Committee considered a bill late in the session that would have adopted the Municipal Police Oversight Act. LB 1222, introduced by Omaha Sen. Justin Wayne, would have required any city that employs full-time police officers create a seven-member citizen oversight board to investigate police shootings, alleged misconduct and complaints against police departments and to monitor and evaluate policing standards, patterns and practices.

LB 1222 did not advance from committee.