Legislature Advances Social Security Tax Cuts, Incentives for Nuclear Reactors

Taxes would be reduced or eliminated on Social Security, and tax incentives would be offered to companies that build nuclear reactors under bills that advanced in the Nebraska Legislature Monday. And, lawmakers discussed fraud in payment of unemployment insurance claims.

Currently, Nebraska taxes Social Security income for single people with adjusted gross income of more than $43,000, and for married couples above $58,000. Under the proposal by Sen. Brett Lindstrom, those taxes would be phased out over the next 10 years. Sen. Lou Ann Linehan, chair of the Revenue Committee, said change is needed so Nebraska can keep retirees in the state.

“It is abundantly clear, ‘cause I’m in this age group, looking towards retirement, and I have way too many friends that aren’t going to stay in Nebraska,” Linehan said.

Sen. Curt Friesen questioned the move, saying any cuts should be focused on people who need them, not those who can afford to move.

“I understand that some people might want to move out of the state, but we’re not talking about that much money in the bigger picture. These are the people that do have the resources to make those things happen if they want. And again, people are going to move for any number of reasons. I for one am not leaving this state even if you keep taxing it (Social Security). I will stay here. I still think we have a good thing going here and I don’t want to be saying that I’m going to pull up stakes and move out because you’re taxing my Social Security,” Friesen said.

By the time the bill is fully implemented, it would cost the state treasury an estimated $139 million a year in foregone revenue – that’s about 3 percent of current state revenues, giving it one of the highest fiscal impacts of any legislation this year.

Several senators said they want to see where other legislation stands, and how the state revenue forecast may be revised on Thursday, and possibly consider limiting the cut to lower and middle income Social Security recipients. However for now, lawmakers voted 47-0 to give the bill first-round approval.

Among other bills advanced Monday was one sponsored by Sen. Bruce Bostelman that would make companies that develop new nuclear reactors eligible for tax incentives. Bostelman touted the new technology as more scalable than current reactors.

“These new advanced nuclear technologies include small modular reactors or ‘SMRs’, microreactors, and molten salt reactors. Some new designs are capable of producing smaller amounts of energy than that of a large scale nuclear plant, with SMRs capable of producing 20 to 300 megawatts of energy, and microreactors capable of producing 1 to 20 megawatts of energy. Next generation reactors such as Natrium can produce more than 345 megawatts,” Bostelman said.

Sen. John McCollister asked about the end of the generation cycle. “What would be done with the nuclear waste that would be coming out of those little plants?” McCollister inquired.

“That’s a good question. (There are a) couple of answers to that: one is there’s new breeder reactors that are out – that have been developed that are out there that actually use up all the fuel. So they’ll use up the spent fuel themselves. The other one is we can reprocess in this country so we could reprocess it. and if that’s not done, then it’s stored on site (with) current safety measures and that and they’re stored on site until they either reprocess it or find another facility to store it,” Bostelman replied.

The Environmental Protection Agency says currently, the United States does not reprocess spent nuclear fuel, nor does it have a disposal facility for high-level radioactive waste. Most high-level radioactive waste is stored at the facility in which it was produced. In Nebraska, that’s at Cooper Nuclear Station near Brownville along the Missouri River in the state’s southeast corner, and the former Fort Calhoun nuclear plant near Fort Calhoun north of Omaha. Nebraska also paid more than $150 million about 20 years ago to settle a lawsuit over the state’s refusal to license a low-level radioactive waste disposal site in Boyd County.

Also Monday, Commissioner of Labor John Albin discussed unemployment insurance fraud with the Business and Labor Committee.

Albin acknowledged there’s been unprecedented fraud during the pandemic, but insisted Nebraska has seen less than other states. He said one measure by the U.S. Department of Labor showed a national fraud rate of 4.35 percent, compared to 2.43 percent in Nebraska. Applying that to the $1.2 billion in claims paid by the Department last year would yield about $30 million in fraudulent payouts.

Sen. Carol Blood talked to Albin about the significance of that kind of figure.

“The audit shows a loss of tens of million dollars of fraud… To me that seems like a lot of money,” Blood said.

“A million dollars in a $1.2 billion program, which is what 2020 was for us, is not a huge number,” Albin said.

“To me as a senator tens of millions of dollars of taxpayer dollars seems a lot of money,” Blood continued.

“Well, it’d be a lot of money if it was sitting in my bank account, that’s for sure,” Albin said.

“Yeah, mine as well,” Blood agreed.

Albin said the department has increased security, citing the change from the CAPTCHA to the RECAPTCHA system to prevent fraud by bots. Blood expressed concern about that.

“The problem with RECAPTCHA is that it allows Google to basically give us surveillance. Like, Google knows everything that’s happening now. So, now we have another portal of information going elsewhere. Is that something we’re comfortable with?” she asked.

Albin defended using the system.

“I guess I am very comfortable with RECAPTCHA as a deterrent. It is certainly not something that’s going to stop all fraud,” he said.

Also Monday, Gov. Pete Ricketts announced he had signed the state budget bills for the next two years, while making no line item vetoes. Ricketts praised the bills for holding annual spending increases to an average of 1.7 percent, and for devoting nearly $1.5 billion over two years to offset local property tax bills. However, the Legislature has rejected the idea, endorsed by Ricketts, of limiting how much local governments can increase property taxes each year.