The legislature passed the budget bills this past week, containing their recommendations for adjustments to the biennial budget that was passed last year. Now it will be up to the governor whether he signs the legislation or uses his line-item veto authority.

Earlier in the week, senators gave second-round approval to the budget bills after a lengthy debate. An amendment to LB 1008 was offered by Omaha Senator Machaela Cavanaugh to direct how the remaining funding from the federal coronavirus Aid, Relief, and Economic Securities Act is spent, rather than letting the governor allocate it. The amendment specified using relief funds to help struggling families through such means as housing assistance, food assistance and childcare subsidies. The chair of the Appropriations Committee opposed the amendment, warning that the state may need it if the virus surges again. Furthermore, Congress is currently discussing whether to give states more flexibility with this funding, allowing it to be used to cover revenue shortfalls. The amendment fell short on a 16-28 vote.

Another amendment was offered by Henderson Senator Curt Friesen to strike several million dollars from the bill. The sponsor withdrew his amendment prior to a vote after a number of senators objected to it, stating that it would be harmful to such entities as service providers for the disabled, public health, and rural housing.

Last week, senators approved a motion to suspend the rules and permit the introduction of a bill beyond the first 10 days of the legislative session. LB 1222, introduced by Omaha Senator Justin Wayne, proposes to adopt the Municipal Police Oversight Act. The public hearing for LB 1222 was held July 31st before the Urban Affairs Committee, which Senator Wayne chairs. This week, Omaha Senator Tony Vargas attempted to introduce a bill regarding additional safety measures at meatpacking plants in response to COVID-19, but the motion fell two votes short of the necessary 30 votes. Following the unsuccessful motion, Senator Vargas offered his proposal in the form of an amendment to LB 667, a bill he introduced that was being held in the Business and Labor Committee. The public hearing on his amendment will be held on Aug. 6. I was supportive of both motions, as I believe these issues warrant a public hearing.

LB 147, which would alter the Student Discipline Act, was debated for six hours this past week. The bill allowed teachers to use reasonable physical intervention to safely manage the behavior of a student and required schools to have a policy on removing and returning a child to class. North Platte Senator Mike Groene, the sponsor of the bill and the Education Committee chair, offered a motion for cloture to end the filibuster and vote on the advancement of the bill. His motion fell one vote short of the necessary 33 votes, meaning that the bill will not be on the agenda again this year.

Changes to the federal tax code contained in the CARES Act will lower state revenue collections by approximately $250 million over the next three years. This is because Nebraska’s income tax structure automatically adopts federal tax changes. (The $250 million reduction in revenue is in addition to any losses that may occur from reduced economic activity.) In response, Albion Senator Tom Briese offered an amendment to LB 1074, a Revenue Committee priority bill, to eliminate this automatic conformity, proposing to decouple Nebraska’s tax code as it relates to the CARES Act.

For example, prior to the CARES Act, federal tax code limited the amount of non-business income that could be offset by excess business losses. This limitation was $250,000 for individuals and $500,000 for married couples. The CARES Act would remove this limitation and would account for approximately $190 million of the projected $250 million loss in revenue to our state.

Since this amendment was a new subject matter, a public hearing was held on July 27th before the Revenue Committee. LB 1074 has yet to appear on the agenda, so no action has been taken on this amendment.