Green Light for Carbon Storage Bill
State lawmakers advanced LB 650 to second round floor debate this week. The Nebraska Farm Bureau supported measure would adopt the Nebraska Geologic Storage of Carbon Dioxide Act and establish the legal and regulatory framework for potential carbon dioxide capture and sequestration projects in Nebraska. The bill was introduced by Sen. Mike Flood of Norfolk and prioritized by Sen. Dan Hughes of Venango.
Broadband Bill Advances
Lawmakers advanced a Nebraska Farm Bureau supported bill designed to give rural customers more input on their broadband carriers this week. The Public Service Commission (PSC) adopted rules in 2018 to withhold Nebraska Universal Service Fund support from telecommunications carriers that do not offer broadband services and instead redirect that funding to eligible carriers who could provide broadband in the same exchange area. Currently, those funds could be redirected only through a reverse auction process. Introduced by Sen. Bruce Bostelman of Brainard, LB 338 would authorize a second method to redirect funds known as a rural-based plan. Providers have been awarded funding in the past but failed to meet minimum standards for broadband service. The bill allows the PSC to consider a rural-based plan that has been created with the input of local businesses, hospitals, schools, residents, and agricultural producers, in and outside city or village limits, on which provider they think will best serve their needs.
School Bond Tax Relief
In addition to the state budget, senators are expected to take up first round floor debate on LB 2 next week, a Nebraska Farm Bureau priority bill. Introduced by Sen. Tom Briese of Albion, the bill would lower the value of agricultural land to 50 percent for purpose of paying principal and interest on K-12 school bonds, addressing a long-standing Farm Bureau member concern where agriculture land pays the bulk of taxes for bond repayment while representing a minority in the voting population. The Committee amended version of LB 2 also includes provisions of LB 79, a bill to amend the annual increase in the state Property Tax Credit Fund (PTCF). The Committee proposal would ensure that the PTCF would increase each year by the prior year amount plus 3 percent.
It’s Official, PPP Deadline Moved to May 31
President Biden signed the Paycheck Protection Program (PPP) Extension Act of 2021 into law this week. The legislation extends the PPP application deadline for two months, through May 31, 2021. Farm Bureau supported passage of the legislation. Farmers and ranchers operating as single-member LLCs and state and county Farm Bureaus who were recently made eligible for PPP, now have more time to apply for PPP loans. On March 12, 2021, the Small Business Administration (SBA) expended PPP eligibility using the gross receipts test to single-member LLCs and qualified joint ventures.
President Biden Unveils Infrastructure/Corporate Tax Package
The Biden administration released a few specifics on their $2 trillion infrastructure spending and corporate tax reform package this week. The American Jobs Plan would spend roughly $2.8 trillion over eight years with the changes in corporate tax laws paying for the package within 15 years. The proposal calls for $621 billion to be spent on transportation projects including roads and bridges, however it also designates $174 billion of that funding go toward the adoption of electric vehicles and the necessary infrastructure. Other highlights of the infrastructure section include:
- $100 billion for high-speed broadband
- $115 billion for repairing bridges, highways, and roads
- $17 billion for ports and inland waterways
- $35 billion for climate research and development
- $40 billion for research infrastructure
- $5 billion for a new Rural Partnership Program to help rural regions
While it was anticipated that the proposal would contain a number of tax code reform proposals, including the elimination of stepped-up basis, the automatic assessment of a capital gains tax on inherited property at death, changes to estate taxes and/or the elimination of 1031 exchanges, the proposal released this week only focused on corporate tax rates/laws. The plan includes an increase of the corporate tax rate to 28 percent vs. the current 21 percent, a set 15 percent corporate income tax on income reported to investors known as “book income”, the elimination of tax benefits for fossil fuel companies, and increased funding for corporate tax law enforcement measures among other changes.
While the target for this proposal was corporations, we anticipate the tax code reform proposals being included in the second half of the Biden team’s “COVID-19 recovery plan” that will be released in the days ahead.
Proposals Impose Capital Gains Taxes at Death
Senate and House Democrats provided an example of what the Biden package might look like with the introduction of the Sensible Taxation and Equity Promotion (STEP) Act by Sens. Chris Van Hollen (D-Md.), Cory Booker (D-N.J.), Bernie Sanders (I-Vt.), Sheldon Whitehouse (D-R.I.), and Elizabeth Warren (D-Mass.). The introduced House bill is H.R. 2286, sponsored by Rep. Bill Pascrell (D-N.J.). The bill poses absolute disaster for farmers and ranchers with the bill treating property which is transferred by gift or at death as if it were sold for its fair market value. This “deemed sale” causes a recognition of gain, the amount that the asset increased in value while owned by the decedent, that is subject to capital gains taxes. The legislation contains an exclusion for up to $1 million of gain. This new capital gains tax at death would be applied on top of existing estate taxes – so that both the new capital gains tax and existing estate taxes would be collected when a farm or ranch owned dies. Farm Bureau is adamantly opposed to this legislation and will be launching a campaign to defend these important tax provisions.
Details: Colorado PAUSE Ballot Initiative
The Colorado Farm Bureau has shared more details with Nebraska Farm Bureau about the Protect Animals from Unnecessary Suffering and Exploitation (PAUSE) ballot initiative in Colorado. The proposed initiative creates new penalties for basic animal husbandry practices and limits when livestock and poultry producers can slaughter their animals. First, the act adds in a new definition of a “sexual act with an animal” that would make it illegal for farmers and ranchers to utilize artificial insemination, pregnancy checking, semen collection, and fertility testing of livestock. This piece alone would decimate the state of Colorado’s livestock industry as modern livestock production depends upon all of these technologies. The initiative also places new requirements on when livestock and poultry can be slaughtered. According to the proposal, livestock and poultry can be slaughtered so long as the animal has lived 25 percent of their natural lifespan (as defined by the act) and is slaughtered in such a way that the animal does not needlessly suffer. The act places the lifespan of cattle at 20 years, chickens at 8 years, turkeys at 10 years, ducks at 6 years, pigs and sheep at 15 years, and rabbits at 6 years. Below is a list of the 25 percent calculation combined with the typical slaughter age of livestock and poultry in the US:
- Cattle (slaughter allowed at 5 years>current slaughter age is around 24 months)
- Chickens (slaughter allowed at 2 years>current slaughter age is around 4-7 weeks)
- Turkeys (slaughter allowed at 2.5 years>current slaughter age is around 5-6 months)
- Ducks (slaughter allowed at 1.5 years>current slaughter age is around 7 weeks)
- Pigs (slaughter allowed at 3.75 years>current slaughter age is around 6-8 months)
- Sheep/Lambs (slaughter allowed at 3.75 years>current slaughter age is around 6-8 months)
- Rabbits (slaughter allowed at 1.5 years>current slaughter age is around 3 months).
This requirement would increase the environmental impact of livestock and also dramatically decrease overall meat quality. The title board of the Colorado Secretary of State’s office gave the ballot initiative’s organizers the go-ahead to begin collecting signatures to get it on the ballot. Colorado Farm Bureau, Colorado Cattlemen’s Association, Colorado Dairy Farmers, Colorado Wool Growers Association, Colorado Livestock Association, and the Colorado Pork Producers Council recently formed Coloradans for Animal Care to oppose the ballot initiative. The group will have a few legal challenges yet at their disposal including an appeal to the Colorado Supreme Court. The costs of such a challenge will likely reach into the millions of dollars relatively quickly. If the group is unsuccessful in their legal challenges, the process of gather signatures to get the initiative on the ballot will begin. Colorado election law calls for the gathering of signatures from more than 50 percent of the voters who voted in the last election (at least 124,632 signatures). Colorado election law does not stipulate that signatures must be collected throughout the state. Now that a formal coalition has been established by Colorado’s main agricultural organizations, it is likely fundraising requests will soon follow. Farm Bureau will provide more updates and possible ways to help agriculture as the issue advances.