Unicameral Update: The Blue Dot and Revenue Package Reveal

By Korby M. Gilbertson, Radcliffe Gilbertson & Brady

As a much-needed four-day break from the Capitol comes to an end, the Legislature readies itself for more debate on some hot topics. Tuesday morning senators will give second-round consideration to a proposal that would take away mobile phones from kids while in school (too bad they can’t force parents to take them away while sitting at the dinner table, or every other waking moment), and another that would require schools to provide notice to parents when schools are conducting certain surveys.  In the afternoon, I expect there will be a crowd for the debate of the “Winner Take All” issue otherwise known as the blue dot.  Governor Pillen has been busy trying to convince Republican hold-out Senator Riepe to support his proposal that would eliminate Nebraska’s current system of awarding electoral votes for President and replace it with a winner take all system used in 48 other states.  We shall see if the filibuster holds and Nebraska remains unique in its approach and relevant in national races.

We were told that later this week some or all of the Revenue Committee proposals would be debated.  However, we have not yet seen any actual amendments so that may not materialize.  We did receive some information about what is expected to be included in one of the Revenue Committee’s priority bills.  LB650 is expected to be advanced to the floor of the legislature for full debate with a committee amendment that will include provisions from four bills.  The following is a summary:

LB270: Allows an individual designated by a municipality to review sales and use tax information to notify the Auditor of Public Accounts of any suspected sales and use tax reporting irregularities and discrepancies. No fiscal impact. 

LB458: With a yet to be seen amendment.  Originally, the bill included three proposals:

• Creates the Permitting Approval Timeliness Act which:
  • Requires a decision for a permit application be complete in 60 days or less.  
  • Requires a reason be provided for a denial or a conditional approval. The denial must be based on applicable laws and regulations.
  • Sets parameters for an appeal of a denial.
• Creates the By-Right Housing Development Act which:
  • Provides approval for housing developments that meet required zoning codes and regulation without the approval of a commission, zoning board or regulator.
  • Ensures duplex and manufactured housing be allowed on lots where single family homes are allowed.
  • Ensures lots with single family homes are allowed to add accessory units and provides size requirements for such units.
  • Disallows municipalities from making certain requirements for accessory units and sets limits on fees that can be charged for applications to build such units.
• Various changes to how counties can sell properties due to unpaid property taxes:
  • Adjusts timeframes for a land bank to acquire a property
  • Increases the fee the treasurer charges to advertise delinquent property from $5 to $20.
  • Sets intent to examine the fee every 5 years.
  • Allows the county treasurer to designate someone to facilitate the sale of a delinquent property.
  • Changes specific requirements or the purchase certificate provided to the new owner.
  • Changes an administrative fee from $100 to $150
  • Changes a fee for issuing a certificate from $20 to $25
  • Removes a $2 fee for a memorandum of redemption receipt
  • Removes a $1 fee for a service of notice.
  • Changes a fee for publication from $5 to $20
  • Outlines timeframes for how a purchaser of vacant or abandoned real estate may apply for a tax deed.
  • Outlines when real estate may be considered vacant or abandoned

LB494: Corrects the transfer provisions included in LB34 from the 2024 special session that established the system of transferring revenue from the General Fund to the School District Property Tax Relief Credit Fund to provide for property tax credits to be front loaded in place of requiring taxpayers to claim credits as part of their income tax filing. No fiscal impact.

LB495: Removes community colleges from the requirement of the Property Tax Request Act. Because funding was shifted from property taxes to general funds, this eliminates the requirement for community colleges to be part of the “pink postcard” hearings. No fiscal impact.

LB650: Part of the Governor’s package, would increase state revenues by around $70 million per year.  The revenue would be generated by the following:

• Eliminates the tax exemption for tower connections for internet access
• Reduces the sales tax collection fees kept by retailers to 2.5% of first $3000.
• Eliminates the income tax deduction for food donations after 1/1/26
• Claws back NE Advantage Rural Development Act funds
• Eliminates the Relocation Incentive Act tax deduction and tax credit after 12/2025
• Terminates the CHIEF Act income tax credit for calendar years 2026 and after.
• Terminates the NE Shortline Rail Modernization Act on or after 1/1/26
• Ends Reverse Osmosis income tax credit after 1/1/26 and reduces current maximum credit to $500
• Terminates the Renewable chemical production income tax credit as of 1/1/26
• Reduces the Biodiesel Tax Credit to $1 million per biennium
• Terminates the Urban Redevelopment Act
• Eliminates Buyer-Based tax exemption

We are waiting to see if other tax proposals materialize.  With the changes expected in LB 650, there would still need to be over $100 million in new revenue to cover the expected shortfall. My guess is that things will become more clear this week, and we will see other proposals advanced from committee to eliminate a variety of sales tax exemptions and potentially increase other taxes. 

Have a great week and don’t look at the stock market!