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Brasch Weekly Column | KTIC Radio

Brasch Weekly Column

Brasch Weekly Column

Week fifteen of the first biennium of the 105th Legislature consisted of days 62 through 65 of this 90-day session.

 

On Friday, April 21st – day 69 – LB 461 is scheduled to be on General File. This is the first time the full Legislature will debate and possibly vote on the tax proposal bill from the Revenue Committee. My column last week described this bill at length and the great importance of moving it forward. In a state where one in every four jobs is tied to agriculture, lowing valuations of agricultural land is key to growing our economy. Statewide needs and inequity in funding and taxes must be addressed, and LB 338, my agricultural valuation bill that was amended into LB 461, would help to address the inequity.

 
Budget discussions are likely to dominate much of the remainder of the legislative session. According to legislative rules, the Appropriations Committee is required to report its budget recommendations to the Legislature no later than April 24th this year. I am anticipating that the budget recommendations will be presented this week, and that we will begin budget debates during the final week of April. Our budget discussions are shaping up to be some of the most contentious we have faced in recent times.

 

A preliminary budget projection prepared by the Appropriations Committee earlier this session indicates that we started the session with a budget shortfall of $134 million. The fiscal status deteriorated even further when projections of state revenues over the next two years were revised downward in February. That revenue forecast added another $153 million to the imbalance. The Nebraska Economic Forecasting Board will provide a final revenue projection before the end of the month, and it is possible that the revenue projection that we will base the budget on will be revised downward again.

 

It will be a difficult discussion, since to balance the budget it will be necessary to make actual cuts in general fund commitments to many ongoing programs while still meeting obligations in corrections, school funding, and other areas. I am also committed to leaving room in the budget for achieving much needed reform of the method of valuing agricultural land for property tax purposes. We do have the option of utilizing some of the state’s “rainy day fund” to help us balance the budget in the short term, but we will not be able to achieve long-term budget stability without reducing the state’s budget commitments and a return to more normal revenue growth in the years ahead.

 

Last week the Legislature debated LB 44, which would require online retailers to collect and remit sales taxes for purchases made by Nebraskans over the internet. As online shopping grows in popularity, it is impacting state and local sales tax revenues as well as being unfair to retail businesses located in the state. While the concept of asking online retailers to collect sales tax is appealing, and by some estimates could result in $30 – $40 million additional state revenues annually, there are many problems surrounding LB 44.

 

During floor discussion it was noted that, even if passed, LB 44 would likely be challenged and enjoined and therefore would not help us with our budget situation for the foreseeable future. A 1992 U.S. Supreme Court decision barred states from requiring out-of-state businesses to remit sales taxes if that business lacked a substantial nexus with that state. That decision has not stopped states from continuing to pass legislation requiring out-of-state businesses to remit online sales taxes. The best solution would be for Congress to intervene, and there are bills in Congress to allow and assist states in collecting online sales tax.

 

Please contact me, my administrative aide, Courtney McClellen; my legislative aide, Brett Waite; or Rick Leonard, the Research Analyst with questions or concerns at (402) 471-2728 or by email at lbrasch@leg.ne.gov; or stop by Room 1022 (please note we have changed office location, two doors south of previous office) if you are in the State Capitol.

 

If you would like to follow the Legislature online you can visit http://netnebraska.org/basic-page/television/live-demand-state-government. Live broadcasting is also available on NET2.

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