ZW Legislative Weekly July 10, 2020
Friday, July 10, 2020
Session Resumes In-Person July 20
With the Legislature set to resume session in a little over a week, some Senators are exploring options of remote participation, but those options don’t seem likely. KETV
reported on the range of views on the matter and the constitutional requirements for the session.
COVID Case Trends Still Good in Nebraska
Governor Ricketts continues to report good coronavirus trends in Nebraska, saying today that about 100 patients are hospitalized with COVID, down from the high of more than 250 inpatients at the end of May and that Nebraska’s 4000-bed hospital system continues to be well-situated to handle caseloads.
Governor’s Authority on CARES Act Funding Questioned
Senator Steve Lathrop, a Democrat from Omaha, has requested an official Attorney General’s opinion as to whether Republican Governor Pete Ricketts had the authority to dole out the Federal funds provided under the CARES Act. According to the Omaha World Herald story
on the issue, “the conflicting legal guidance being cited: The Nebraska Constitution requires that the Legislature approve any specific appropriations, but a budget bill passed last year gives the governor the authority to direct the spending of any federal dollars not specifically sent to a state agency.” Senator Lathrop has asked for an opinion to be issued prior to July 20, when state lawmakers reconvene for the final 17 days of their 2020 session. Whether or not the opinion is issued prior to session, the question is sure to be just one of the many discussions taken up when the Senators reconvene.
What a week of wonky webinars! This week your lobbyists were glued to our computers even more than usual, tracking developments on the big issues awaiting resolution in the remaining days of the legislative session.
The tax policy think-tank OpenSky shared its analysis
that federal CARES Act tax changes could create large state business tax cut in the midst of a pandemic. OpenSky is urging legislators to decouple from tax changes contained in the CARES Act, which would result in approximately $250 million in reduced state revenue over the next three years. (Nebraska is among several states where state income tax is tied to the federal tax code, making any federal tax change automatic in the state.) OpenSky argues that Nebraska cannot afford the stimulus-style tax cuts that the federal government funds with further borrowing. The largest share of revenue losses are due to an expansion of Net Operating Loss deductions from tax years beginning in 2018 or 2019, so OpenSky says the changes are not explicitly targeted to businesses affected by the pandemic. OpenSky points out that other states that conform to federal tax law are decoupling from CARES Act changes.
The Nebraska Chamber and Platte Institute countered this message, arguing decoupling from the CARES Act tax provisions would be a tax increase, adding more taxes onto already hard-hit businesses. They say the CARES Act provisions were intended to help stimulate the very businesses that are in most need right now. If more businesses close or can’t reopen to the same extent, more jobs will be permanently eliminated in Nebraska, hindering the recovery and further dashing hopes of sustainable property tax reform. They also point out that the Net Operating Loss deductions are just being accelerated under these changes and that the revenue impacts from NOL changes are just being realized faster.
The decoupling debate is important because it offers one possible revenue source to pay for a trio of priority proposals—property tax relief, business tax incentives, and a major Med Center project—that would all cost hundreds of millions in state tax revenues over the next few years.
Senator Lou Ann Linehan, chair of the Legislature’s Revenue Committee, shared in a Platte Institute webinar on Wednesday that she thinks getting these three measures passed is an all-or-nothing proposition.
“I don’t think right now, any one of the bills on their own have 33 votes. So I think in the end, I’m hopeful, that we will find a way to put them together and have a package that helps all Nebraskans – helps ag, helps business, helps homeowners – and helps make sure that we keep the industries that we need in Nebraska, in Nebraska,” Senator Linehan said.
The Nebraska Department of Labor announced that beginning next week, people wishing to continue to receive unemployment benefits, including the $600 federal supplement available through July 25, must search for work, a requirement that had been waived in the state since March 15. Governor Ricketts said Nebraska employers are listing more than 30,000 available jobs.
Michelle and Katie