Center for Rural Affairs February 21, 2005 Nebraska Legislative Update

-- from the desk of Jon Bailey, Director, Rural Research and Analysis Program,
Center for Rural Affairs

Legislative Update

February 21, 2005

State Budget Process: The Legislature’s Turn

The Legislature’s Appropriations Committee has begun the Legislature’s part budget-making phase. Last week the Committee issued its preliminary budget that will be subject of public hearings over the next few weeks.

The major assumption in the Appropriation Committee’s budget is that the Economic Forecasting Board will increase the amount of revenue available to the state. We will all know if that assumption turns out to be a valid one when the Forecasting Board meets on February 25. Because of this assumption, the Committee’s preliminary budget is $64 million higher than the Governor’s budget released in January. Most of the increase is attributable to University faculty salary increases and increases in rates paid to health care providers contracting with the state.

The Committee budget also makes some adjustments in the Governor’s budget, many of them to encourage state agencies to justify positions contained in the Governor’s budget. An example is the inclusion in the Committee’s budget of the Main Street Program that was eliminated in the Governor’s budget.

Appropriation Committee Hearings

Appropriations Committee public hearings represent the next phase of the budget making process. Generally, the committee schedules several state agencies with common missions for hearings on the same day. These hearings are for agencies to comment on and justify their budget and for the public to provide input. The schedule for the next two weeks; all hearings begin at 1:30 pm.

Feb. 24 – Advocacy agencies and commissions (Commissions for the Blind, Status of Women, Mexican-Americans, Indian Affairs and Deaf; Equal Opportunity Commission; State Foster Care Review Board)

Feb. 25 – Taxation (Departments of Revenue and Property Assessment and Taxation and Tax Equalization and Review Commission)

Feb. 28 – Law and Order (State Courts, Board of Pardons and Parole, and State Patrol)

Mar. 1 – Health and Human Services


LB 126 Compromises

On February 15, Senators reached a compromise that advanced LB 126 to Select File. LB 126 is the bill that proposes “assimilation” of all Class I elementary-only schools into K-12 districts. It was the topic of a lengthy discussion in this space last week, and lengthy debate over fours days in the Legislature. In an effort to get moving on other matters and to avoid a do-or-die vote to end debate that neither side was confident in winning, Speaker Brashear brokered a compromise to vote now, talk and determine if the issues can be resolved.

In the agreement brokered by Speaker Brashear, opponents of LB 126 allowed a vote to advance LB 126 with the agreement that several issues would be the subject of negotiation and possible amendment prior to a Select File vote. According to Speaker Brashear, the issues that will be further discussed and subject to negotiation include:
Allowing only K-12 systems in Nebraska, a concept central to the purpose of LB 126;

Postponing implementation of LB 126 until residents of Class I districts have had the
opportunity to participate in the next K-12 school board election;

Accounting for existing cooperative agreements among Class I districts that provide services
under a common administrative structure; broadening the set of standards under which a
K-12 school board would allow Class I districts to continue operating;

Holding Class VI districts financially harmless from the changes made in LB 126.

The opponents of LB 126 made clear that they reserve their rights to continue debate on LB 126 and attempt to filibuster if these issues are not resolved to their liking.

With this agreement, LB 126 was advanced to Select File on a 33-8 vote (Senators Erdman, Fischer, Heidemann, Hudkins, Langemeier, Louden, McDonald and Smith voted “No”; six other rural Senators – most stated opponents to LB 126 – did not vote). Thirty-three votes is an important number – that is the number of votes needed to end debate on a bill, something LB 126 may need before all is said and done.

Sen. Thompson Resigns

Sen. Nancy Thompson of Papillion announced her resignation effective at the end of the session. Her term ran until January 2007. The Governor will appoint her replacement.

Bills Update

Any bill designated a Priority Bill will also have a “P” attached to its number (for example, LB 123P). The chief sponsor of the bill is listed in parentheses.

The words Support or Oppose after a bill description indicate where the Center for Rural Affairs has taken a position on the bill. If neither word is indicated, the Center has not taken a position at this time.

NOTE: Once a bill is Indefinitely Postponed (killed) or signed into law, we will remove it from the Legislative Update list.

Rural Development

LB 28 (Connealy) – The “Endow Nebraska Act.” The bill would provide a tax credit for a contribution to a qualified charitable organization. The bill sits on Select File. Support

LB 59 (Mines) – Would change the provision in the Microenterprise Development Act defining “microenterprise to allow for microenterprise loans up to $35,000 (from $25,000). On February 17 the bill was advanced to preparation for Final Reading. Support

LB 273 (Cunningham) – Would create the “Building Entrepreneurial Communities” program through a $1 million grant program for each of the next two years. The bill awaits action in the Government, Military and Veterans Affairs Committee. Support

Agriculture/Livestock

LB 71 (Stuhr) – Would re-authorize the Agricultural Opportunities and Value-Added Partnership Act (formerly the LB 1348 grant program). This program was terminated through budget cuts in 2001 and 2002. This bill would reauthorize the program through 2009. The bill sits on General File. Support

LB 132 (Cunningham) – This bill modifies the Nebraska Pasteurized Milk Law by providing exemptions to small-scale dairies and processors to the often-expensive bottling and processing requirements, and by allowing dairies and farmers to advertise on-farm sales of non-pasteurized milk (currently, the sale of non-pasteurized milk cannot be advertised). The bill sits on General File. Support

LB 191 (Preister) – Would allow permit local requirements for environmental protection and financial assurance under the state’s environmental laws (including the Livestock Waste Management Act). A hearing is scheduled before the Natural Resources Committee on February 23.

LB 346 (Agriculture Committee) – Would modify several provisions of the Beginning Farmer Tax Credit Act all with the goal to increase utilization of the tax credit. The bill sits on General File. Support

Education/Schools

LB 126P (Raikes) – Would mandate the “assimilation” of Class I schools (elementary-only schools) into K-12 school districts for the 2006-07 school year. Oppose.

LB 129 (Education Committee) – An overhaul of the formula for state aid to schools. The bill is pending in the Education Committee.

Taxes

LB 133 (Connealy) – Would provide a renewable energy sales tax credit, and would provide any generator of electricity from a renewable resource a credit against any sales and use tax. A hearing was held before the Revenue Committee on February 16.

LB 309 (Connealy) – Would establish the Small Business Rural Microenterprise Tax Credit. The bill would provide for $2 million worth of tax credits annually for small business (with five or fewer employees or beginning farmers/ranchers) in areas with declining population or low incomes or federal enterprise zones. The bill awaits action by the Revenue Committee. Support

LB 404 (Wehrbein) – Would create a tax credit for modernization and expansion of livestock facilities. The goal of the bill is to “attract and retain investment in Nebraska’s livestock industry.” The bill is pending in the Agriculture Committee.

Business Tax Incentives

In this year’s session there are numerous bills relating to amending Nebraska’s business tax incentive laws or creating new tax incentive programs. The primary bill is LB 646, the Advantage Nebraska Act, which would create a new, more generous tax incentive program to take the place of LB 775. The Fiscal Note for LB 646 estimated a revenue impact of the new incentive program of $61 million by 2011 (in addition to the ongoing LB 775 revenue impact). LB 646 awaits action in the Revenue Committee.

Other

LB 189 (Preister) – Would mandate an electricity portfolio from renewable sources of 1% in 2007 and increasing 1% every year until it reaches 10% in 2017. This would apply to all electricity produced in the state. The bill also creates a mechanism for the buying and selling of credits to meet the portfolio standard. The bill was Indefinitely Postponed on February 15 by the Natural Resources Committee.

LB 208 (Stuthman) – Provides for the appropriation of $1.75 million annually for the next two years to the state’s five federally qualified health clinics to provide services to the uninsured (the clinics are in Omaha, Lincoln and Scottsbluff). The bill is scheduled for hearing before the Appropriations Committee on March 1. Support

LB 550 (Jensen) – Requires a plan to be submitted by December 1, 2005, for the financial support of community health centers and emergency medical services in the state. The bill awaits action by the Health and Human Services Committee.

LB 655 (Beutler) – Would create the Task Force on Small Employers Health Plans that would review data and policy ideas concerning health care plans for small employers and recommend policy steps for the state on this issue. The bill is scheduled for hearing before the Banking, Commerce and Insurance Committee on February 22. Support.