Budget-related bills to fund Nebraska’s property tax relief plan advance, without changes

Nebraska State Sens. Myron Dorn, Robert Clements and Terrell McKinney, from left, listen to Gov. Jim Pillen during his first State of the State on Wednesday, Jan. 25, 2023. (Zach Wendling/Nebraska Examiner)

LINCOLN — Two budget-related legislative bills advanced Friday to help offset the cost of Nebraska’s latest core property tax relief plan.

Legislative Bills 2 and 3 , both offered by State Sen. Rob Clements of Elmwood, chair of the Appropriations Committee, moved forward Friday without changes. State Sens. Terrell McKinney and Machaela Cavanaugh, both of Omaha, tried unsuccessfully to persuade their colleagues to preserve $38.5 million in funding cuts from LB 2.

That included $25 million from the Nebraska Department of Health and Human Services and $3.5 million in unspent funds for the Legislative Council, which Cavanaugh tried to save Wednesday. The other was $10 million from the Nebraska Department of Correctional Services.

“We should be using these dollars to improve these departments,” McKinney said. “We got water issues, we’ve got child and family issues that need to be addressed.”

McKinney has described DHHS and Corrections as the departments of “Helm and Harm” and “Punitive Services” and argued that both need financial investments to improve outcomes and conditions, including water in correctional facilities.

He suggested diverting the $10 million being transferred from Corrections and using it for repairs and maintenance on the Nebraska State Penitentiary water system infrastructure. He and State Sen. Wendy DeBoer of Omaha said the state could either spend $10 million now, or twice as much later.

“This is not rocket surgery,” DeBoer said.

Lawmakers voted 28-15 against that amendment from McKinney. They also voted 29-15 against Cavanaugh’s amendment to pull the three funding cuts.

McKinney on Wednesday did save $250,000 in the Corrections Department  interest earned from state fees for license plates and other items produced by state prisoners.

Clements said DHHS CEO Steve Corsi and Corrections Director Rob Jeffreys were in favor of the cuts, which the Legislature already advanced. Clements said Jeffreys also had not requested new funding for water system repairs.

“The committee did consider reductions,” Clements said, “but we kept them reasonable so that we’re not cutting agencies down to the bone.”

State Sen. Justin Wayne of Omaha suggested adding a sales tax exemption for residential electricity , similar to an exemption extended in 2022 to another utility: water. It would have cost the state at least $65 million, and local governments $18 million.

Lawmakers fell one vote short, 21-17 , of overruling a decision from Lt. Gov. Joe Kelly that the amendment was not germane, or “in a natural and logical sequence” to LB 3’s subject matter. It needed 22 yes votes, a simple majority of 43 senators on the legislative floor.

LB 2 advanced 32-8 and LB 3 advanced 32-7 . Together, the bills amount to $139 million in budget cuts, increased fees, cash fund transfers and holding back unspent funds from 2023-24.

A remaining $46 million would be pulled from the state’s cash reserves to fund $185 million in new property tax relief , contained within LB 34 , which also advanced Friday.

The core tax and budget bills will head to final debate as early as Monday.

SUBSCRIBE: GET THE MORNING HEADLINES DELIVERED TO YOUR INBOX