Nebraska Pulse Political Blog

News and Views about Politics in the Great State of Nebraska

LB297CA Opens Tax Spigot for Economic Development

March 29th, 2010 Posted in Business and Industry, Taxes
Mar, 29 2010
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Senators passed a measure March 26 seeking to amend the state constitution to allow municipalities more options for funding development projects.

LR297CA, sponsored by Wilber Sen. Russ Karpisek, will place on the November 2010 general election ballot a proposed amendment to the state constitution that would change the powers of municipalities relating to funding sources for economic or industrial development.

Currently, the Legislature may authorize cities and villages to use funds raised from general taxes for economic or industrial development, subject to approval by voters.

The proposed amendment would allow the use of funds derived from property tax, local option sales tax or any other general tax levied by a municipality, or funds generated from utilities owned by the city, to be used to issue revenue bonds for defraying the costs of development projects.

All projects would be subject to voter approval and the measure would allow a city to use funds received from grants, donations or state and federal funds.

The measure passed on a 47-0 vote.

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Governor Receives Final Budget, Signature Expected

March 29th, 2010 Posted in Money and Finance, State of Nebraska, Taxes
Mar, 29 2010
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The Legislature moved a $3.4 billion budget Friday to Gov. Dave Heineman for his review.

It includes a 2 percent cut for most state agencies — on top of a 5 percent cut approved in a November special session — and a $3 million transfer from the $324 million cash reserve, needed to help cover an approximate $45 million shortfall.

Speaker Mike Flood thanked the Appropriations Committee, its staff and the rest of the Legislature for passing the 2010-11 budget.

“Might I remind you, in every other state in the nation what we did today takes weeks, 24 hours of work, bitter fights and constant disagreement,” he said. “People in other states can’t believe what we accomplish when we work together.”

Nebraska has a unique situation with a nonpartisan Unicameral Legislature. Most of the hard work and disagreements happen in the Appropriations Committee as the nine members hammer out a budget proposal to present to the full Legislature.

By the time all senators get it, compromises have been worked out.

And the $45 million budget gap isn’t as bad some other state’s shortfalls.

Iowa, for example, is working on a $5.3 billion budget that includes a 10 percent across-the-board spending cut that will help to fill a $341 million budget gap.

Kansas is looking at a budget deficit that could reach $500 million and is considering proposals to cut millions in social services or a possible income tax increase.

Nebraska is anticipating more pain in the next two-year budget.

This session’s main budget bill included a requirement, proposed by Omaha Sen. Heath Mello, for state agencies to develop efficiency plans that could include consolidating programs, streamlining services and moving to a four-day work week.

Agencies are working on those plans along with figuring out how to cut another 2 percent.

State Education Commissioner Roger Breed said his department is looking at any and all considerations for its additional $230,000 cut.

He, his deputy and assistant will not get salary increases, but because of the minimal increases the staff has received the past several years, they will not be included in the freeze, he said.

The Foster Care Review Board will institute a wage freeze for its six administrative staffers, including Executive Director Carol Stitt, for an $11,000 savings toward its $27,708 cut. The remainder will be taken from personnel savings, including vacancies and filling one position with a 2/3 rather than full-time worker.

The Department of Health and Human Services is starting to look at how it will cut 2 percent more in its administrative division. It will consider leaving vacancies open and consolidating offices, for example, said CEO Kerry Winterer.

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Contractors Under Scrutiny for Independent Contractor Classifications

March 23rd, 2010 Posted in Business and Industry, State of Nebraska, Taxes
Mar, 23 2010
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The AP reports, “Nebraska lawmakers are clamping down on construction contractors who avoid paying taxes and benefits to workers by calling them independent contractors instead of employees.”

According to the story, LB563 received first-round approval last week and would “impose stiff fines against contractors and trucking companies that treated workers as independent contractors when they were in fact employees.”

JournalStar.com reports that “the growing practice of calling employees independent contractors” is hurting “honest companies that can’t compete with lower bids,” according to Omaha Sen. Steve Lathrop, who introduced LB563.

The bill “would penalize construction and delivery service companies for misclassifying workers.”

According to the article, “the bill is, in part, aimed at illegal immigrant workers.”

The story also notes that “the bill uses the state’s unemployment law definition for contract worker,” and would establish penalties of “$500 per worker for the first time a company is caught using contract workers illegally and $5,000 per worker for later offenses.”

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Nebraska leaders mulling unemployment insurance stimulus funding

May 19th, 2009 Posted in Agriculture, Energy and Oil, Social Issues, State of Nebraska, Taxes
May, 19 2009
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JournalStar.com reports that state leaders are still pondering whether to accept a portion of available federal stimulus funding — “about $43.6 million that could be used to help pay for unemployment benefits.”  The drawback? Accepting the federal funding comes with a federal mandate to expand unemployment insurance benefits, which would almost certainly lead to “higher future costs” — all of which would be shouldered by Nebraska businesses.  According to the Journal Star, “the state can get the money by improving the state’s unemployment benefits in two of four specific categories.”  The article notes that “labor leaders support the improved benefits and don’t see any reason to dawdle. … State business interests are still weighing the options, looking for a route that won’t lead to higher unemployment taxes in the future.”  According to the story, “Gov. Dave Heineman, who must ask for the money, says he’s not interested in this stimulus funding if it requires an eventual tax increase. … (L)abor and business interests have at least another year to come up with a solution.”  Ron Sedlacek, General Counsel for the Nebraska Chamber of Commerce & Industry told the Journal Star, “It would be a simple decision if the only issue was putting money into the unemployment trust fund.”  But accepting the federal money with strings attached “could lead to a permanent tax increase.  And seeking the money will require changes in state law, he noted.

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Tax Foundation: Nebraska’s Property Taxes Comparatively High

May 11th, 2009 Posted in Social Issues, State of Nebraska, Taxes
May, 11 2009
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According to the non-partisan Tax Foundation, Nebraska is one of the 37 states that collect property taxes at both the state and local levels.  “As in most states, Nebraska’s local governments collect far more” than the state government.  (In 1966, Nebraska voters adopted a constitutional amendment that abolished property tax as state revenue source.  The tax base for most local entities – county governments, school districts, etc. – has remained primarily property taxes, while state government now must depend mostly upon sales and income for its revenue.)  The Tax Foundation notes that in 2006, the latest year available from the Census Bureau, “Nebraska’s localities collected $1,268.72 per capita in property taxes.”  All told, Nebraska’s combined state/local property taxes were $1,270.13 per capita in 2006, ranking 17th highest nationally.  More than $3,200 in property taxes were collected for each Nebraska household – accounting for roughly 32.50% of total state taxes, according to the Tax Foundation.  This compares to $2,882 in state and local property taxes per household in Colorado; $2,469 in South Dakota; $2,820 in Iowa; $2,174 in Missouri; $3,021 in Kansas; and $4,785 in Wyoming.

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Nebraska’s income tax turns 42 years old

May 4th, 2009 Posted in Social Issues, State of Nebraska, Taxes
May, 04 2009
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The Lincoln Journal Star reports that it was 42 years ago this month that the Nebraska Legislature voted to enact “both a sales tax and an income tax to fund state government — and help fund Nebraska’s public schools.” Republican Gov. Norbert Tiemann signed the bill into law.

According to the story, “the Tiemann record of change is broad and deep and lasting” and “the income tax was the flashpoint.” The article notes that “a combination sales-income tax system fueled the revenue stream in a way that the sales tax alone could not do, and it was Tiemann who stubbornly insisted on both against powerful opposition. … The income tax angered powerful voices in Omaha, including its corporate leadership.” In an interview with the Journal Star, Tiemann says: “I wouldn’t do anything differently today

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If you want taxes cut, where do you find the money?

February 27th, 2009 Posted in Economy, Social Issues, State of Nebraska, Taxes
Feb, 27 2009
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Nebraska lawmakers may have a sweet tooth for tax cuts. “It’s got to be the No. 1 issue we hear about in our districts, day in and day out,” said Speaker of the Legislature Mike Flood of Norfolk. And even with the sour economy, a debate on taxes will be on the menu for the 2009 legislative session.

Funding for Governor Dave Heineman’s $115 million-a-year property tax credit program, passed in 2007, is up for reauthorization this year. State Senator Tom White of Omaha plans to take another stab at amending the program, a debate likely to ignite a battle between urban and rural factions in the Legislature.

A survey by The World-Herald found 16 state senators who said that, despite forecasts of flat economic growth, the Legislature should seek tax cuts this year. Among the options they mentioned were income tax cuts and renewing property tax credits. Seven lawmakers said they didn’t think tax cuts were possible, and 17 were undecided.

Nine did not respond to the question. Govenor Heineman said in an interview that tax cuts in general help build a climate that is attractive to businesses looking at locating or expanding in Nebraska. However, he said, it was too soon to say whether a three-year string of tax cuts during his administration can be continued in 2009.

The state faces a projected $377 million gap between tax revenue and expenses for the two-year budget starting July 1. Heineman submits his budget to the Legislature on Jan. 15. Senator Abbie Cornett of Bellevue, who is seeking to become chairwoman of the Revenue Committee, said the state’s budget situation complicates any tax-cut proposal this year.

Even though $115 million has been included in preliminary budget projections to continue the property-tax credit program, she said, money is being looked at to finance a variety of state needs, not just tax cuts. “That money is going to be in play this session,” Cornett said.

“There’s going to be a number of different ideas on how to use it.”

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States set to impose bevy of new taxes

February 27th, 2009 Posted in Social Issues, State of Nebraska, Taxes, Uncategorized
Feb, 27 2009
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Governors in several states want to levy higher taxes next year on clothes, soft drinks, gasoline, auto licenses and other items that likely will hit low- and middle-income families struggling to make ends meet in a deepening recession the hardest.

One of the most sweeping revenue packages comes out of New York, where Democratic Governor David A. Paterson wants to raise $4 billion with 137 new or increased taxes and fees in the budget, including an 18 percent so-called “anti-obesity tax” on non-diet soft drinks. Satellite TV, cigars and professional licensing fees also are targets.

“Middle-income families do not get wage increases during a recession, but neither should the states. Families have to cut back, and so should state government. They should cut spending,” said Chris Edwards, who tracks state budgets at the libertarian Cato Institute. While states are generally holding the line on income taxes, analysts said, many are pushing tax and fee increases on products, services, licenses and businesses that most people consider necessities.

In Kansas, for example, Governor Kathleen Sebelius, a Democrat, and state legislative leaders are calling for a major cigarette-tax increase, between 50 cents and 75 cents a pack, to help finance health care programs. Wisconsin legislators are considering tax and fee increases, and South Dakota is weighing a higher gas tax.

“Even die-hard Keynesians would tell these governors that raising taxes in the middle of an economic slowdown will only perpetuate the recession cycle,” said Pete Sepp, spokesman for the National Taxpayers Union. One positive trend among the states in this economic decline is the reluctance to raise income taxes, fiscal analysts said.

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Nebraska governor offers sobering budget forecast

February 21st, 2009 Posted in Economy, Money and Finance, Social Issues, State of Nebraska, Taxes
Feb, 21 2009
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Governor Heineman laid out a more sobering forecast for the state budget Wednesday morning, saying the worsening economy will allow little to no growth in state spending for the next few years. Speaking to a water policy group, the governor said he would oppose any attempts to raise taxes in 2009.

He said the state’s record cash reserve, which is approaching $574 million, should be used only for one-time expenditures or to avoid tax increases. “Everyone thinks the cash reserve is going to solve all of our problems. It’s not,” Heineman told a gathering of the Water Roundtable.

Heineman said that while Nebraska is one of nine states not facing a budget crisis, the state is starting to feel the effects of the nationwide recession. That, he said, is expected to worsen the state’s forecasts of tax revenue to no growth or negative growth.

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Nebraska eyes more limits on Republican River water

September 16th, 2008 Posted in Legislature, Social Issues, State of Nebraska, Taxes
Sep, 16 2008
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State and local water officials are considering new irrigation restrictions in the Republican River basin in the wake of a lawsuit that has undercut Nebraska’s efforts to comply with a three-state river compact. Talks between state and local officials started recently, prompted by a lawsuit nine residents of the basin won in May.

They challenged a key part of a new state law that was the cornerstone of a plan to send Kansas more water. “Without LB701, we have to look at … regulations,” Jasper Fanning, manager of the Imperial-based Upper Republican Natural Resources District, said Wednesday. The law known as LB701, passed by the Legislature last year, gave natural resources districts in the heavily irrigated river basin the authority to set property taxes. But in ruling for the nine residents of the basin, a Lancaster County District Court said the taxes were unconstitutional.

Brian Dunnigan, acting director of the state Department of Natural Resources, said he expects his office and the natural resources districts will have a plan in place by the end of the year. Shortly afterward, lawmakers may again take up the issue of how to collect money for compliance because of the court ruling on property taxes. Kansas contends Nebraska used about 80,000 acre-feet, or roughly 26 billion gallons, more than it was allowed in 2005 and 2006. Kansas has demanded more than $72 million for the overuse in addition to a shutdown of wells that irrigate nearly half of the 1.2 million acres in Nebraska’s portion of the river basin.

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