Center for Rural Affairs March 29, 2005 NE Legislative Update
Center for Rural Affairs
March 29, 2005
The Appropriations Committee continues to develop their final budget recommendation to the Legislature. The committee is required to have a plan to forward to the Legislature by April 28.
The primary task of the committee is to determine what spending proposals are worthy of including in their final recommendation. State agencies and other proposals are requesting nearly $400 million more than what was included in the committee’s preliminary budget proposal released in February.
State agencies and others have requested nearly $250 million over the committee’s preliminary plan, and there is about $150 million in additional spending at various stages of legislative debate.
A main determinant of how much will be spent is how much the Legislature wants to place in reserve. Based on increased revenue forecasts, one scenario being considered by the Appropriations Committee is spending $132 million in addition to the preliminary plan and placing $127 million in reserve.
The Nebraska State Forecasting Board will meet once more before the Appropriations Committee releases its final plan. The Forecasting Board’s revenue findings may determine how much is spent and how much is placed in reserves.
Rural Development Legislation
During last week’s initial floor debate on LB 273, the Building Entrepreneurial Communities Act, there was significant discussion of the state’s rural development policy. The discussion had two distinct portions – the ability of the state to pay for any of the bills being proposed and the need for a comprehensive rural development policy in the state.
While the two arguments appear contradictory, they are related in that they are being used as justification for inaction. In fact, the Legislature has before it a comprehensive, common-sense and cost-effective rural economic development package to help ensure a viable and sustainable future.
This package is built on a simple premise: It is time to build a new rural economy in Nebraska, an economy supported by three pillars – 1) focus on community and regional resource mobilization; 2) find a niche, not a commodity; and 3) grow more entrepreneurs.
This model is now the commonly accepted model of revitalizing rural economies. The Center for the Study of Rural America of the Federal Reserve Bank of Kansas City, for example, has discussed at length the need for states to develop a rural policy based on new components of rural governance and agricultural and non-agricultural entrepreneurship.
Four bills and provisions in the Governor’s proposed budget fit together to create this new rural policy model. They are not – as some Senators have stated – disparate measures with no common purpose. They are all pieces of a comprehensive rural revitalization package advanced by the Governor’s appointed Nebraska Rural Development Commission.
LB 273, the Building Entrepreneurial Communities Act, and LB 28, the Endow Nebraska Act, will mobilize communities and public and private resources to begin planning economic development within and between communities. Both bills provide resources to communities and regions that generally do not have the access to state, federal or private funds for planning, entrepreneurial training, private fundraising and leadership development – all crucial to economically successful communities.
Once communities and regions have mobilized, they can expand opportunities for business and job creation. In rural Nebraska, those opportunities will come from entrepreneurship, specifically small businesses and value-added agriculture. During the 1990s, over 70 percent of job growth in rural Nebraska came from small, non-agricultural businesses, and currently nearly one in three private, non-farm jobs in rural Nebraska come from small businesses with five or fewer employees.
The Legislature and the Governor now have a golden opportunity to implement several measures that will create even more jobs and businesses in rural Nebraska.
LB 71 would provide grants for farmer- and rancher-owned cooperatives to take advantage of value-added agricultural opportunities to fill profitable new markets.
The Governor’s budget would boost small business development by increasing funding for loans, training and technical assistance for entrepreneurs and small businesses.
LB 309 would provide tax relief to small business owners and an incentive for those seeking to start and grow small businesses.
Together, these proposals and bills would cost the state about $6 million. And not all of that would go to rural areas – several of the bills and proposals would also apply in urban areas of the state. This represents less than FOUR percent of what the state currently spends on tax incentives for big business expansion and recruitment. The Legislature is debating how to include additional revenue in its budget. This rural development package represents about TWO percent of those available funds.
Several Senators have put forth a list of economic development programs available to rural areas, both public and private. But they cost communities money to access (money they don’t have, but that LB 273 and LB 28 would provide), they are not available to small rural communities, they are targeted for elimination, or they are stretched too thin in resources and personnel so as to be ineffective for the demand in rural Nebraska.
Other Senators have proposed we need a study of what is needed for rural development. Rural communities across the state don’t have time for a “study” – the economic and demographic challenges facing them are accelerating daily. What works for rural economic and community development has been studied for years in Nebraska and across the nation. The result is the package now before the Nebraska Legislature.
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.
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 273P (Cunningham) – Would create the “Building Entrepreneurial Communities” program through a grant program for each of the next two years. In General File debate on March 23, the Legislature approved an amendment offered by Sen. Synowiecki that would restore the original proposed funding of $1 million annually (the committee had reduced the funding to $200,000 annually) and would apply the program to federal enterprise zones in Omaha. Sen. Cunningham also filed an amendment to LB 273A (the appropriation bill) to increase the appropriation to $500,000 annually (from the committee’s $200,000). The bill is still scheduled for additional debate on General File. Support
LB 71P (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. Sen. Stuhr has designated this as her Priority Bill. The bill awaits a vote on Final Reading. 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 346P (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
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. The bill awaits action on Select File. Oppose
LB 129P (Education Committee) – An overhaul of the formula for state aid to schools. The bill is pending in the Education Committee.
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. The bill was Indefinitely Postponed by the Revenue Committee on March 29.
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 is pending in 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 was Indefinitely Postponed by the Revenue Committee on March 29 (Senators Cornett, Janssen, Landis, Preister and Redfield voted to kill the bill; Senators Baker, Connealy, and Raikes voted to advance the bill).
Business Tax Incentives
The Revenue Committee is still developing a bill to advance to the floor later this week or next.
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 pending in the Appropriations Committee. 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.