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State senators ended a tumultuous 2023 session Thursday, giving a final OK to bills concerning voter identification, tax breaks for economic development and criminal justice reform. The 90-day session ended two days early and will be remembered for historic tax cuts, hard feelings aired during floor debate, and an almost session-long string of filibusters mounted in protest of a bill that banned gender-affirming procedures for minors. State Sen. Tom Briese of Albion, a key player in the legislation that delivered income tax cuts and property tax relief,summed it up best: It was a "momentous session" for what got done and for how hard it was to get those things done.
Here are legislative highlights from the 2023 session.
Nebraska and Iowa enacted Pass-Through Entity Tax (PTET) legislation during the 2023 legislative sessions, joining 33 other states that allow PTET.
State lawmakers largely stuck with Gov. Jim Pillen on Wednesday, approving only one override of his budget vetoes — an additional $1.2 million for the State Auditor's Office. State Auditor Mike Foley had asked for additional funding, arguing that he was losing auditors to other state agencies because they could offer $20,000 to $30,000 more a year in pay due to 22% pay raises for state employees effective July 1 — raises not granted to auditor personnel.
‘Elections matter,’ and new senators voted in ‘lockstep,’ though progressives got some wins.
States, including Nebraska, continue to move ahead with implementing new passthrough entity taxes as a workaround to the $10,000 cap on the federal deduction of state and local taxes.
Under the shadow of tightening state revenues, the Nebraska Legislature gave final approval Thursday to a $6.4 billion tax relief package. State lawmakers approved income tax cuts, hikes in state property tax credits, a tax credit for child care and a boost to school funding to offset property taxes.
State lawmakers gave a final OK Thursday to a two-year budget that calls for about $5.3 billion a year in spending, with an average increase of 2.2%.
Debate on the two-year state budget begins Wednesday, and it might come down to a decision about what's more important, tax cuts or spending on things like provider rates and child care. The budget-writing Appropriations Committee gave final approval of its proposed budget last week, leaving just over $700 million to spend on tax cuts, increased school aid and other priorities. But that's about $100 million less than has been projected to be expended by the two packages of bills that provide for cuts in state income taxes and increases in tax refunds for property taxes paid.
The Nebraska Legislature's budget committee voted out a proposed state budget Tuesday that calls for an average increase of 2.3% in spending over the next two fiscal years. The proposed budget by the Appropriations Committee compares to a 1.5% increase recommended by first-year Gov. Jim Pillen. The main differences between the two proposals is that lawmakers have included an additional $80 million to increase rates for providers of Medicaid services and have upped the budget increase for the University of Nebraska system from Pillen's proposed 2% to 2.5%.
The Legislature’s Appropriations Committee signed off on a two-year state budget plan on April 25 that would leave more than $703 million for tax cuts and other uses, but could still force clashes over legislative priorities. The plan doesn’t leave enough room for the two major packages of income tax changes and property tax relief that lawmakers advanced earlier this month.
In a letter written to the Lincoln Journal Star, NE Chamber President Bryan Slone, the Platte Institute and the National Taxpayers Union Foundation discuss what makes Nebraska uncompetitive for remote workers – our tax code.
MoneyGeek gave each state a grade based on its tax-friendliness with "A" being the best and "F" being the worst. Wyoming was found to be the most tax-friendly state and Illinois the least, with an $11,340 difference in tax burden per year. Nebraska received a “D” and was ranked at 41st with 12.7% of income being taxed. Since 1980, 21 states have decreased their effective state-local tax rates, and Nebraska is not one of them. South Dakota, Colorado and other neighboring states have seen a 0.1-0.5% decrease in the last four decades, while Nebraska has seen a 0.7% increase, falling at #24 for most increased taxes.
Using "tax day" as a backdrop, Gov. Jim Pillen joined some key state senators and two tax groups Tuesday in touting legislative proposals that aim to reduce Nebraska's top income tax rate to 3.99% by 2027. Tuesday was the deadline to file state and federal income tax returns, and the governor and others maintained that the state needs to be more competitive when it comes to taxes. "It's really important that we have a tax policy that gets us in the game," Pillen said.
Churchill once said, “Democracy is the worst form of government, except for all the others.” It’s surely messy and sometimes maddening. But democracy is self-correcting, so more of it truly is the solution. - George Ayoub
63 days into the 108th session, the Nebraska Legislature passed its first bill – LB376E – and forwarded it to the Governor for signature. The bill creates a brand registration for the Nebraska Liquor Control Commission, allowing the Commission to better identify alcoholic products being imported into or produced in the Cornhusker state.
Decades of legislative frustration with Nebraska’s results after spending billions of dollars in fees and funds since the late 1990s to boost broadband access boiled over into a floor debate Thursday about possible fixes for a state agency’s funding decisions and follow-through. Senators are weighing who at the state level should direct up to $400 million in new federal grant funds set aside for broadband expansion: the elected members of the Nebraska Public Service Commission, which manages the program now, or a person appointed by the governor to head a new office under the governor’s direction. Before reaching a vote, lawmakers expect a few more hours of filibuster-forced discussion Friday about LB 683, which proposes removing the Public Service Commission’s authority to award the $100 million to $400 million for broadband build-out in underserved areas of the state.
A package of state income tax cuts, designed to move Nebraska to among the lowest tax states in the country, advanced Thursday, March 30, from first-round debate on a 41-0 vote. The main sponsor of LB 754, State Sen. Lou Ann Linehan of Elkhorn, said that if the package is ultimately passed, the state should rank among the lowest 15 states in the union in terms of taxation. Right now, the Tax Foundation ranks the state's "business tax climate" as 29th nationally. Under LB 754, the state's top personal income tax rate, along with the state corporate income tax rate, would gradually decrease to 3.99% by tax year 2027. That proposal and a property tax relief proposal are projected to provide $3 billion in combined tax cuts over six years. That is billed as a record by Gov. Jim Pillen, who is backing the measures.
Speaker of the Legislature John Arch on Tuesday spelled out the first price he will exact for the persistent filibuster by State Sen. Machaela Cavanaugh of Omaha and others slowing the legislative session to limit how much legislation gets discussed.
The Urban Affairs Committee heard testimony March 7 on a bill that would create an executive branch state agency focused on housing and urban development in Nebraska.
Lawmakers adjourned on Thursday for a four-day weekend. With one-third of the 2023 Legislative Session in the books, much work remains. Having completed two weeks of two-a-day committee hearings, the Legislature scheduled initial floor debate on bills that had advanced from committee on Monday, February 13. Unfortunately, the legislative body ground to a screeching halt over confirmation reports (gubernatorial appointments) that typically take a few minutes each to process, by spending three full mornings of debate (approximately eight hours) on the confirmation reports.
While many voters might not care about how much tax corporations are asked to pay, they do care about the opportunities these employers provide in their communities, so a state’s tax policies have to be aligned with the goal of landing corporate relocations and expansions. Nebraska currently has the 18th highest corporate income tax among all states. It used to be even higher.
Proposed legislation to provide a sales tax exemption for business inputs that could have resulted in an estimated $277 million reduction in state revenue by the 2026-27 fiscal year appears headed toward a legislative study following adjournment of the current legislative session.
As explained in this article, amending a bill in the Nebraska Legislature to add a voluntary, retroactive pass-through entity tax law, or PTET law, would provide many Nebraska business owners with federal income tax relief. Better still, a PTET law would not cost the state any tax revenue — that’s right, zero decrease in the tax revenue that Nebraska collects, says Jeffery Schaffart of Koley Jessen.
Spending priorities include building a $574-million canal, a new prison and funds for mentoring children and state worker salary increases
In an effort to make Nebraska more competitive with other states and within itself, Gov. Pillen has a plan to modernize Nebraska’s tax code and provide tax relief. Over the past week, Gov. Pillen and state senators have promoted multiple tax relief bills. If passed, these bills would be among the largest tax relief packages in Nebraska’s history, potentially returning hundreds of millions of dollars back to Nebraskans.
Governor Jim Pillen has announced six priority bills for the legislative session aimed at transforming Nebraska's tax code, making our state's tax system more competitive with other states, improving workforce development, and providing parents and their children additional choices for education.
Nebraska has a new member of Congress after U.S. Sen. Pete Ricketts was sworn in Monday in the Old Senate Chamber in the U.S. Capitol, with Sen. Deb Fischer, R-Neb., at his side.
Nebraska's tax system ranked 35th overall on the 2022 State Business Tax Climate Index, although rankings are improving after last year's tax relief efforts. Gov. Pillen hopes to make at least the top 15 states for tax climate.
A total of 58 changes to the permanent rules were proposed to the Legislature this year, which led to more than 100 testifiers speaking during a marathon nine-hour Rules Committee hearing last week.
Gov. Jim Pillen unveiled a package of proposed tax cuts on Wednesday that he labeled as "historic" and making Nebraska more competitive with other states. The package includes a gradual reduction in state personal and corporate income tax rates to a flat, 3.99% — which mirrors the rate recently adopted in Iowa — and a shift in the funding of community colleges off property taxes. It also would adopt a new way of valuing agricultural property based on the land's income-producing potential and would limits increases in ag land valuations for tax purposes. In addition, state lawmakers will be asked to accelerate, and make immediate, the elimination of state income taxes on Social Security.
A total of 812 legislative bills were introduced through Wednesday — the deadline for bill introduction — which is short of the record 885 bills introduced in 1997 for a similar 90-day session.
In just nine days, over 800 bills were introduced in the Nebraska Legislature. Wednesday was the final day for state senators to introduce bills, and they didn’t let up, submitting 184 of them. Four constitutional amendments and one resolution were also submitted on Wednesday, totaling 30 and 31 respectively for the session.
Committee hearings will commence Jan. 23.
Sen. Robert Dover of Norfolk has proposed a constitutional amendment that would allow lawmakers to serve a third consecutive four-year term in the Legislature. Currently they are limited to two terms.
Nebraska Gov. Jim Pillen shared the names of the eight other people he interviewed for the open Senate seat ahead of choosing former Gov. Pete Ricketts for the appointment. Among the eight were Society members Don Kluthe, who is a Society past chairman, and Bryan Slone, who is president of the Nebraska Chamber of Commerce.
State Sen. Joni Albrecht of Thurston on Friday proposed letting voters weigh in on a constitutional amendment that would eliminate the Nebraska State Board of Education and give the governor control over the state Department of Education.
The Rules Committee considered 58 possible changes to the permanent rules that govern legislative proceedings during a marathon public hearing Jan. 12. The rules generally are adopted at the beginning of each biennium. The proposals, offered by a variety of senators, ranged from technical revisions to substantive changes meant to increase transparency and political participation in the legislative process.
About half of Nebraskans, including about 81% of the state’s children, would benefit from a newly proposed child tax credit law, said State Sen. Danielle Conrad of Lincoln, who introduced the bill Wednesday. Conrad said Legislative Bill 294 would provide families earning a certain income level a refundable tax credit up to $1,000 per child. Nine other states have enacted a similar child tax credit in addition to the federal credit, according to the National Conference of State Legislatures.
Results of the opening day's leadership votes and subsequent recommendations for committee assignments have triggered allegations ranging from partisan behavior to a partisan takeover of the 2023 Legislature.
Backers of a dramatic change in state taxation announced changes to their proposal on Thursday as they launched a petition drive to place a “consumption” tax plan before Nebraska voters in 2024. “This falls into the category of if it sounds too good to be true, it probably is,” said Bryon Slone, president of the Nebraska Chamber.
Speakers at a press conference said that a tax on consumption would fix the state's "broken" tax system, reduce cost by eliminating property tax-related offices, and make Nebraska a more attractive place to live.
Senators reconvened Jan. 5 to begin introduction of new bills.
Jim Pillen, a 67-year-old hog operator from Columbus, is the state’s first governor to earn most of his living from farming since George Sheldon left office in 1909. Pillen has put his adult children in charge of the family business while he is in office.
The anticipated fight over the rules outlining how the Legislature chooses its leaders never materialized on Wednesday. State senators adopted the rules of the last legislative session on Day One of the 2023 session, which will guide the proceedings until lawmakers can consider and vote on permanent rules later this month. That kept in place — at least temporarily — the method of choosing committee chairs by secret ballot, the standard in the Legislature for 50 years.
Several state senators — mostly Democrats in the officially nonpartisan body — say they were disappointed with the way committee membership was decided at the onset of the 90-day session.
State senators put off until later a fight over legislative rules, then spent the first day of the 2023 session on Wednesday electing a new speaker and leaders of legislative committees.
A proposed constitutional amendment that will be introduced on Thursday — the first day senators can introduce legislation in the 108th Legislature — would revert Nebraska’s legislative branch to a time before Nebraska voters approved Norris’ vision for a one-house legislature.
Twenty-six members of the Legislature were sworn into office Jan. 4 as the 108th Nebraska Legislature convened for its 90-day first session. That number includes nine re-elected senators, 16 newly elected senators — including two members who have served in the Legislature previously — and one newly appointed senator.
Instead of the nearly all-White, nearly all-male Legislatures of decades past, the new group of 49 will include a record 18 women. It also includes two Black, two Latino, one Asian American and two openly LGBTQ senators, making it the most diverse Legislature in state history.
The Nebraska Legislature is scheduled to convene on Wednesday, Jan. 5, 2022. The most effective way for legislators to understand issues facing the accounting profession is to receive input from the CPAs they represent. As experts in your field and key advisors to businesses of all sizes, your input is critical to both our state and our nation.
One of the best ways to connect with state legislators is to attend the Society’s annual State Senators’ Reception and Dinner, which will be held beginning at 6:00 p.m. on Jan. 4, 2022, in the Renaissance Room at The Cornhusker Marriott in downtown Lincoln. Although it was cancelled last year due to the COVID pandemic, this event carries a long-standing tradition of being the first official event prior to the start of the Legislative Session.
CPA Firm Ownership Bill. State Sen. John Stinner of Gering, a retired CPA, has agreed to introduce the Society’s bill that would make changes to CPA firm ownership. In a nutshell, the legislation would remove the physical “head count” ownership requirement for CPA firms while maintaining that CPAs must hold at least 51% equity ownership of a CPA firm. We are hopeful for passage of this bill during the upcoming session.
Universal Licensing. On Oct. 27, State Board Executive Director Dan Sweetwood, Society Lobbyist Walt Radcliffe, and I, along with representatives from the Nebraska Board of Engineers and Architects, met with State Sen. John McCollister of Omaha to request exclusion of our professions from LB263, the proposed universal licensing bill introduced by Sen. Tom Briese in the 2021 Legislative Session. After examining the “Amendments to LB263,” which Sen. McCollister shared with us that day, we were pleased to learn that the document did exclude “a credential issued for a certified public accountant pursuant to the Public Accountancy Act.”
Sen. McCollister was the sponsor of an interim study resolution, LR191, to explore the effect of universal licensing on groups that have traditionally faced barriers to occupational licensing; the hearing on LR191 was held Oct. 29 by the Nebraska Legislature’s Government, Military, and Veterans Affairs Committee, where Sen. McCollister presented the “Amendments to LB263.”
Exclusion of the CPA profession is the result of conversations among former State Sen. Laura Ebke, Society Past Chairman Jim Greisch, Sweetwood, and I this past spring. Ebke is presently a senior fellow with the Platte Institute and is focused on the state’s job licensing laws. Greisch is a retired partner with RSM and formerly served on the Platte Institute Board of Directors.
Under universal recognition, workers with job licenses, career experience, and military specialties would be able to come to Nebraska and receive licenses for jobs they were trained for in other states. While this bill may have its place for certain occupations, we believe there is a critical difference between occupations and highly complex, technical professions whose work impacts the health, safety, and welfare of the public. High-impact professions such as the CPA profession require rigorous licensing, including high standards for education, examination, and experience.
While exclusion of the CPA profession from this legislation is positive news, the Society will continue to monitor this bill as it is anticipated to move through the Legislature in 2022.
Taxation of Accounting Services. If you attended the Society’s Fall CPE Conference, you heard a presentation on Blueprint Nebraska’s “Framework for Tax Modernization” by Nebraska Chamber President Bryan Slone, Platte Institute Chief Strategy Officer and former State Sen. Jim Smith, and retired CPA Jim Griesch. The Blueprint Nebraska plan includes policy changes to individual income tax, corporate income tax, sales tax (including the addition of a sales tax on accounting services), incentive programs, elimination of the inheritance tax, and funds for property tax relief. Although we have not taken a formal position on this framework, the Society has historically been opposed to sales tax on accounting services. We will continue monitoring the progress of this framework (and other proposals) should legislative proposals come to fruition in the coming session.
On the Federal Level. Society Chairman Erica Parks, Past Chairman Pat Meyer, and I attended the virtual AICPA Council Meetings held with the Nebraska congressional delegation the week of Oct. 25. Both Parks and Meyer are members of the AICPA Governing Council representing the state of Nebraska. Meetings were held with Rep. Adrian Smith, Sen. Deb Fischer, and Alan Feyerherm, who is chief of staff for Rep. Jeff Fortenberry.
Among the topics covered were:
- Providing taxpayers with targeted COVID-19 tax penalty relief from the underpayment of estimated tax penalty and late payment penalty for the 2020 tax year;
- Granting the IRS authority to issue disaster relief in a timely manner in response to state-declared disasters;
- Recognizing accounting as a Science, Technology, Engineering and Math (STEM) profession; and
- Passing a Fiscal State of the Nation resolution that would ensure Congress is made aware of information in the federal financial statements so that they can gain a better perspective on the nation’s fiscal health. Since these meetings were held, the House has passed the resolution; it has yet to pass the Senate.
In addition, a small group of members participated in an in-person “CPA Roundtable” on Nov. 12 with Congressman Don Bacon in Omaha. Discussion included the bipartisan infrastructure deal as well as the Build Back Better framework. Rep. Bacon was one of the 13 House Republicans who has come under fire for voting for the $1.2 trillion infrastructure bill. He pointed out that the bill includes $2.5 billion for Nebraska roads, will provide more access to rural broadband, and will help fix the country’s highways, seaports, and locks. Most of the bill is paid for by unspent COVID money, said Bacon. He hopes the Democrats’ other bill, for $1.75 trillion to fund President Joe Biden’s Build Back Better agenda, does not succeed. Bacon said there has been a lot of misinformation on the infrastructure bill and that people were trying to attach these two bills together.