Another week has gone by and much was discussed on the floor of the Legislature. Taxes took up a large portion of time with Legislative Bill 367 being debated. In that bill, we considered the tax package put together by the Revenue Committee that proposed a reduction of more than $400 million in taxes over the next two years. In the proposal, the Revenue Committee recommended changes to property taxes, income taxes, sales taxes, and the estate tax.

The committee's proposal that advanced to Select File, the second round of debate, creates a property tax credit of over $150 million in direct property tax relief over the next two fiscal years. Included in the second year is a reduction in the school levy lid from $1.05 to $1.00. State aid to schools in 2008 would receive an additional $59.6 million.

In regards to income tax, the committee package addressed a few areas. First, it eliminates the "marriage penalty," increasing the married, filing joint brackets so that it is double the single brackets. Secondly, it adjusts proportionately the head of household brackets and increases the standard deduction to the federal level. Third, it decreases the maximum income tax rate from 6.84 to 6.65

Moving to sales tax, LB 367 repeals the sales tax on construction labor for commercial projects. The repeal would go into effect October 1, 2007. This bill also establishes a new sales tax exemption for community based wind energy projects.

The Revenue Committee proposal also changes the estate tax by doubling the exemption from the current level of one million dollars to two million dollars. In addition, LB 367 provides for an increase in the current tax credit for renewable energy projects, and eliminates its requirement of one-megawatt capacity to be eligible for such a credit. This would allow the credit to be available to more projects.

During the debate, two other proposals were discussed at length. One proposal would have replaced the committee amendment. It would have provided an income tax credit of $500 for property taxes paid, and eliminated the estate tax. The second alternative idea proposed to the body would have only kept the committee's property tax credit and the reduction in the school property tax lid by five cents. The rest of the committee amendment would have been replaced with a reduction in the state sales tax rate from 5.5% to 5%. Both alternative proposals were defeated and the committee amendment advanced with a 38-2 vote.

In addition, last week my bill, LB 701, advanced from Select File to Final Reading with several amendments. This round of amendments included an increase in reporting, oversight, and accountability.

One amendment gave authority to the Natural Resources Committee to get timely reports from the Natural Resources Districts on their plans to increase stream flow and the benefits they expect to see from the planned projects. Other amendments were adopted requiring reporting from NRDs to the Department of Natural Resources for funding from the Water Resources Cash Fund. The NRDs are required to explain how their plans will assure compliance to the compact and the implementation schedule for the project. There were also requirements for DNR to report to the Legislature on the use and cost of the funds from the Water Resources Cash Fund added to the bill.

There were several other amendments that I believe improved the bill by tightening up the language and making the intent clearer. LB 701 should come to the floor for passage some time this week.

As always, I appreciate hearing from you. Please contact me with any questions

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