Spending, taxes and medical cannabis yet to be debated in Nebraska legislative session

LINCOLN — Counting by the calendar, the 2019 session of the Nebraska Legislature is more than two-thirds over, but much of the heavy lifting remains.

Property tax relief, the state budget, business tax incentives and medical cannabis have yet to be debated by the full Legislature, while lawmakers are looking at ways to influence how the state carries out Medicaid expansion.

Meanwhile, senators have been busy working on a host of other bills. As of Thursday, more than half of the bills named as priorities for the session had been debated at least once and about 20 percent had been passed and sent to the governor’s desk.

So what’s the status of those major issues?

1. Property tax relief

After weeks of discussion, a public hearing is scheduled at 4 p.m. Wednesday on a proposal to decrease local property taxes by increasing state aid to K-12 schools by $540 million. Some taxes would rise so others could fall. State sales taxes would go from 5.5 cents to 6.25 cents, and a handful of sales tax exemptions would go away. Plus, a “documentary stamp” tax paid when you buy a house or land would double.

But some rural senators aren’t totally in love with Legislative Bill 289, and neither are some advocates for the poor, who see the sales tax hikes as hitting low-income folks harder. And, some ask, can you really justify taxing services performed by plumbers and movers but not barbers and roofers?

Expect some changes in LB 289 before it hits prime time, and even then, there are still questions about whether a bill can attract 33 votes to overcome a filibuster and defeat an almost-guaranteed veto by Gov. Pete Ricketts.

2. Medicaid expansion

Until recently, the voter-approved expansion of Medicaid to more low-income Nebraskans appeared to be a non-event in the State Legislature. The Appropriations Committee quietly put money for the expansion in its preliminary budget, and a bill calling for legislative oversight of implementation remained in committee.

Then on April 1, state officials unveiled their plan for carrying out the expansion. It calls for pushing back the start date by nine months, to Oct. 1 next year, and setting up a two-tier coverage system for the new enrollees. To get full benefits, people would be required to work, study, care for family members or do other activities.

The plan has raised concern among lawmakers. In response, they are scrutinizing the sharp increase in proposed administrative costs and will be discussing how to step up oversight of the process.

3. Medical marijuana

Supporters of legalizing medical marijuana in Nebraska continue pursuing a two-pronged strategy. The chief sponsor of a legislative legalization proposal has spent weeks seeking compromise and crafting an amendment to LB 110. Sen. Anna Wishart of Lincoln said she hopes to get the bill advanced from the Judiciary Committee and debated by the full Legislature soon.

At the same time, she and Sen. Adam Morfeld of Lincoln are leading the Nebraskans for Sensible Marijuana Laws petition drive. Circulators have started gathering signatures on the petition in hopes of getting a medical cannabis initiative on the November 2020 ballot.

Meanwhile, a bill to legalize industrial hemp and its products, including cannabidiol, or CBD, products, is making its way through the legislative process. LB 657 would allow marijuana’s non-intoxicating cousin to be grown, harvested, processed and marketed in Nebraska.

4. Business incentives

The ImagiNE Act, the proposed replacement for the 14-year-old Advantage Act, won’t come up for debate until later in the session, after debates on property tax relief and the budget.

There’s broad agreement that the Advantage Act needs to be replaced. It was hard to predict when companies would take their tax breaks, thus complicating budgeting, and hard to pinpoint whether the incentives really created new jobs or just rewarded companies that were already going to expand. Plus, it didn’t target the kind of high-wage jobs that will keep talented young people in the state.

The ImagiNE Act, according to its sponsor, State Sen. Mark Kolterman, addresses the criticisms, and will help companies in Nebraska grow and work to keep the state competitive in attracting new firms. It won’t be cheap: It’s projected to excuse about $150 million a year in state taxes.

5. State budget

The Appropriations Committee will wrap up its state budget package after getting updated revenue projections this week. The projections will be the first to consider how the March flooding and blizzards could affect the state’s economy, as well as incorporating the results of the April individual income tax collections.

Sen. John Stinner of Gering, the Appropriations Committee chairman, remains hopeful that the revenue numbers will not change much, despite the storms and the ongoing effects of the Trump administration tariffs. Stinner expects to deliver the budget bills to the full Legislature by May 2, and debate will get underway the following week. The budget covers the two fiscal years ending June 30, 2021.

Included in the preliminary budget is a $51 million annual increase in property tax credits sought by Ricketts, as well as money to boost payment rates for Medicaid, child welfare and other service providers. It also includes money for two high-security prison units and to open more problem-solving courts.

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