The first session of Nebraska’s 108th Legislature adjourned Sine Die on June 1, two working days ahead of the scheduled adjournment of the long, 90-day session. While the session was highlighted by filibusters on virtually every measure, the legislature passed and the Governor signed into law 291 bills, which is comparable to the level of activity in recent years.
Despite dealing with many contentious issues, the 2023 Legislature adopted meaningful tax relief for small business owners and individuals and held the line on spending under the state budget.
TAX RELIEF
The legislature adopted major income and property tax relief in the form of LB 243 and 754. Highlights of the measures, are as follows:
LB 754 – Lowers the top two individual and corporate income tax brackets to 3.99% by 2027 and exempts social security from income taxes beginning in 2024. The measure is designed to provide over $3.3 billion in tax relief by fiscal year 2029.
LB 243 – Increases contributions to the Property Tax Credit Fund, removes community colleges from the property tax rolls, and establishes caps on local school district spending. Combined with increases in state aid to education ($1 billion this year and $250 million each year thereafter), the Legislature will deliver over $3.3 billion in property tax relief by fiscal year 2029.
STATE BUDGET
The legislature adopted a $10.7 billion state budget package which increased state spending by 2.3% over the next two years. In the waning days of the session, Governor Pillen exercised his line-item veto authority to veto $119 million in spending, with the legislature only able to override $1 million of these vetoes. As finalized, the state’s Cash Reserve fund is expected to be at $779 million by June 30, 2025 (13% of annual state revenues).
LOOKING AHEAD TO 2024
All legislation that was not adopted or indefinitely postponed this session would be carried over to the 2024 Legislative session. The primary bills of interest, which are opposed by NFIB, that could receive further consideration next session, include the following:
LB 57 – PAID FAMILY AND MEDICAL LEAVE INSURANCE ACT: Would establish a statewide paid family medical leave insurance program similar to Nebraska’s unemployment insurance system, managed by the state Department of Labor. The bill would also apply to all employers’ subject to the Employment Security Act (one or more employees), with self-employed individuals eligible to participate. Would provide employees with benefits of up to two-thirds of the state average weekly wage for up to 12 weeks of leave or, for leave taken on an intermittent basis, 60 workdays during any benefit year. Finally, the measure would allow 12 weeks or 60 workdays of paid leave if taken intermittently and would base the paid leave upon 90 percent of an individual’s average weekly wage that is at or below 50 percent of the state average weekly wage and 50 percent of the individual’s average weekly wage that is above 50 percent of the state average weekly wage, not to exceed 66 percent of the state average weekly wage.
LB 79 – TAXATION CONSUMPTION TAX ACT: Would eliminate all property, income and corporate taxes and replace it with a tax on the use or consumption in the state of Nebraska of taxable property or services (excludes intangible property and services) at a rate of 7.5%.
