Session Review: Revenue
The Legislature’s Revenue Committee considered bills this session that would provide agricultural property tax relief, grant tax credits for early childhood education professionals and modify arena turnback tax provisions.
Property tax relief
Introduced by Grand Island Sen. Mike Gloor on behalf of Gov. Pete Ricketts, LB958 grants $224 million in property tax credits for tax year 2017—a continuation of credits offered last year totaling $204 million. This year an additional $20 million in credits will be allocated specifically to agricultural and horticultural landowners.
The bill passed 47-1.
Senators considered several other bills related to agricultural land valuation this session.
Current state law excludes land associated with buildings from being classified as agricultural or horticultural land. Under LB1037, introduced by Bancroft Sen. Lydia Brasch, farm sites and farm home sites would have been classified as agricultural or horticultural land and therefore would have been valued at 75 percent of market value like other agricultural land.
The dwellings, buildings and other enclosed structures on the land would continue to be valued at 100 percent of their market value.
After three hours of debate on general file, Brasch filed a motion to bracket the bill until April 20, the last day of session. The Legislature obliged, ending further debate on the bill.
Tax credits and exemptions
LB774, introduced by Norfolk Sen. Jim Scheer, provides a sales and use tax exemption for purchases made by nonprofit substance abuse treatment centers.
The bill includes provisions of LB510 by Omaha Sen. Tanya Cook. These provisions allow an employer a nonrefundable tax credit equal to 20 percent of its expenses used for an employee’s postsecondary tuition or costs associated with a high school equivalency program. The tax credit is valid for no more than two years of an eligible employee’s expenses.
Provisions of six additional bills were added to LB774, including:
• LB542, originally introduced by Omaha Sen. Burke Harr, which creates a sales tax exemption for county agricultural societies;
• LB888, originally introduced by Omaha Sen. Heath Mello, which clarifies that insurance companies are eligible for tax credits under the Nebraska Job Creation and Mainstreet Revitalization Act and reserves the first $4 million for applications seeking a credit of less than $150,000;
• LB1014, introduced by Gering Sen. John Stinner, which exempts from levy limits any property taxes levied for bonds issued by a county airport authority;
• LB1015, introduced by Harr, which creates a sales tax exemption for museums that rent or lease items of historical or cultural significance;
• LB1047, introduced by Harr, which adds the drying and aerating of grain in commercial facilities as a qualified activity under the sales tax exemption for energy used in manufacturing and processing; and
• LB1088, originally introduced by Hyannis Sen. Al Davis, which creates a sales tax exemption for centers that support independent living.
The bill passed on a 37-10 vote.
Davis also introduced LB886, passed 46-0, which creates a $250 refundable tax credit for volunteer emergency responders, rescue squad members and firefighters who meet certain criteria. The bill establishes a point system to determine annual qualifications for the credit.
LB889, introduced by Mello, creates two tiered tax credits—one for providers of eligible early childhood care and education programs and another for staff members.
A child care or early childhood education program will have to be assigned a quality rating under the Step Up to Quality Child Care Act to qualify for the credit. The amount of the credit will be determined by the program’s quality rating and the average monthly number of children who attend the program.
The bill also directs the state Department of Education to develop a classification system for employees of applicable early childhood care and education programs. An employee’s rating will be based on his or her level of education, training and work history. The rating will determine the amount of credit the employee receives.
The total amount of credits will be capped at $5 million per year and the credits will be available for five years beginning Jan. 1, 2017.
The bill passed 42-5.
Omaha Sen. Joni Craighead introduced LB683, passed 47-0, which allows a veteran’s surviving spouse to retain his or her homestead exemption after remarrying.
Under current state law, surviving spouses of veterans who died on active duty or were honorably discharged and drew disability compensation are eligible to retain the veterans’ homestead exemption only if they do not remarry. The bill allows a surviving spouse to retain the exemption if he or she remarries after age 57.
Turnback taxes
Senators passed two bills dealing with provisions of turnback taxes. Under current state law, 70 percent of state sales taxes generated by new and existing hotels near a convention center are turned back to the city to help pay for the new facility. Cities that build arenas receive 70 percent of state sales taxes generated by nearby retailers. The remaining 30 percent is directed to a fund that provides development grants to smaller communities across the state.
LB884, introduced by Scheer, extends turnback tax provisions to any publicly or privately owned hotel located within 600 yards of an eligible facility.
The bill allows Lincoln to use 10 percent of its turnback taxes to pay for low-income housing projects and extends to 48 months the period during which taxes are turned back to political subdivisions to pay for sports arena facilities.
The proposal allows cities to use the turnback tax to pay for capital improvements on the facilities, in addition to paying off the principal and interest on bonds used to pay for construction.
The bill passed 43-4.
Under LB285, introduced by Sen. Merv Riepe of Ralston, any development grant funds in excess of $1 million at the end of each year will be distributed proportionally to the cities that generated the turnback revenue to help pay for convention centers and sports arenas.
Senators voted 41-3 to pass the bill.
Performance audit
LB756, introduced by the Legislative Performance Audit Committee, terminates Nebraska’s Long-Term Care Savings Plan on Jan. 1, 2018. Any participant is entitled to receive the full balance of his or her account on that date.
Investment earnings from the plan will be deducted from an individual’s adjusted gross income (AGI) and AGI will increase for unapproved withdrawals for tax years beginning before Jan. 1, 2018.
The bill passed on a 49-0 vote.
