Senators advance tax breaks despite fiscal warnings

The Nebraska Legislature Thursday advanced tax breaks on everything from donations to crisis pregnancy centers to sales of biodiesel. The move came despite warnings that the state is headed for a budget shortfall if senators pass all the bills that are currently advancing.

Thursday began with senators giving final approval to more than a dozen bills. They included a bill to expand prenatal services, including nutrition and mental health counseling, for women on Medicaid. Another bill would require someone to get law enforcement certification before being eligible to serve as a county sheriff.

Then, lawmakers switched gears to consider LB937, which would grant tax breaks for a wide range of activities. But before that, Speaker John Arch injected a note of caution.

“I think we're kind of experiencing a 2023 hangover. There was so much money in 2023 that …a $20 million fiscal note was nothing in 2023. We had the dollars and we had good cause for spending those dollars. And so, we got used to that, and I'm afraid now that we have spilled over into 2024. But what we did in 2023 committed that revenue,” Arch said.

Senators then began debating the tax break bill which would reduce those revenues. One of the main proposals, by Sen. Eliot Bostar, was to tax credits up to $3,000 for expenses of people taking care of family members in their home who need help with activities like eating, walking or bathing. Sen. Jana Hughes said the proposal reflects an increasing need.

“Frankly, with the baby boomer generation retiring and getting older and all our nursing homes seemingly closing right and left, we will have to address more creatively how we take care of these folks,” Hughes said.

The bill also gives tax credits for sales of biodiesel, for companies that make films in Nebraska, for companies that employ people with developmental disabilities, for maintenance of shortline railroads, and for production of plant-based aviation fuels.

The most controversial part of the proposal was a tax credit for contributions to crisis pregnancy centers. That provision was originally a bill by Sen. Joni Albrecht, a staunch abortion opponent, who said the centers help pregnant women, especially since Roe v. Wade was overturned.

“They are helping the state of Nebraska in ways that I can't even begin to tell you, by helping these people get jobs, by helping them further their education, by helping them get a car or a place to live,” Albrecht said.

Opponents of the proposal said the centers mislead women into thinking they are medical providers, and offer slanted advice in an effort to steer them away from abortion. Sen. Carol Blood said pregnant women need sound advice.

“Women are more than vessels that carry your babies. They are human beings, they are people, and they deserve to have good choices that are backed by the medical community and the ability to make decisions about their own reproductive health care. But you cannot make sound decisions unless you are given accurate information. And that's why these clinics concern me,” Blood said.

Bostar offered a compromise amendment that would have expanded the tax credits to include other organizations, such as those dealing with domestic violence and human trafficking. But that failed, with only 17 senators in favor and 24 opposed.

Sen. John Cavanaugh then offered an amendment to exempt diapers from sales tax. Cavanaugh noted that supporters of raising the sales tax have argued it does not apply to essentials, like food, and added that diapers are essential, too.

“If you want to support new mothers and fathers -- new parents -- if you want to support babies, if you want to help Nebraska families raise those babies, this bill does it,” Cavanaugh said.

Senators voted 31-4 to add Cavanaugh’s amendment to the bill, which they then gave first-round approval 40-0. But Sen. Myron Dorn, a member of the budget-writing Appropriations Committee, suggested the effort might be in vain.

Dorn pointed to projections that if all the bills that have passed the first round of debate were approved, the state would fall $370 million below its legally-required budget reserve by the end of the next two year budget cycle.

“This bill doesn't matter, this bill won't go nowhere, unless you come back and bring us some funding sources back,” Dorn said.

That sounds like a tall order, given the controversy already surrounding a proposal to increase and expand the sales tax to provide more school funding and lower property taxes.

Senators are now off for a four-day weekend, and will resume deliberating on that and other proposals Tuesday.