With the 90-day legislative two-thirds of the way completed, here’s a rundown of where things stand on a handful of key bills of interest to agriculture.
A Break on Bonding
A bill to lower the value of agricultural land for purposes of paying the principle and interest on K-12 school bonds is making its way through the Legislature. Agricultural land would be lowered from 75 percent of market value to 50 percent under a bill introduced and prioritized by Sen. Tom Briese. The bill originally sought to lower the value of agricultural land to one percent but was amended to 50 percent during first round floor debate. Agriculture landowners often represent a large majority of the tax base responsible for paying off rural school bonds but have a minority voice in determining the outcome of school bond measures. LB 183 would seek to bring greater equity into school bond repayment. The Farm Bureau-supported bill awaits second round floor debate.
Lowering Personal Property Taxes
A measure that would offer a permanent fix so Nebraskans wouldn’t pay higher personal property taxes as a result of changes in federal tax law is headed for final round legislative debate. Introduced and prioritized by Sen. Curt Friesen, the bill changes the method for calculating Nebraska-adjusted basis for “like-kind exchanges” of similar depreciable personal property. In a real-world example, if a new combine cost $400,000 and the trade-in value of the combine is $300,000, the combine would have a tax basis of $100,000 under LB 663. Without the bill, the combine would be taxed at $400,000. Nebraska Farm Bureau is supporting LB 663.
The Legislature gave first round approval to Sen. Justin Wayne’s LB 657 April 15. The bill authorizes the growing, processing, and handling of industrial hemp under regulation of the Nebraska Department of Agriculture and provides the authority necessary for the department to prepare and implement a state plan for purposes of the hemp provisions of the 2018 Farm Bill. The committee-amended version of the bill adopted by senators also temporarily expands participation in the hemp research pilot program to authorize wider participation for the 2019 growing season. The Hemp Commission would also be reorganized as a hemp checkoff program under the measure. Nebraska Farm Bureau supports LB 657. Sen. Tom Brandt of Plymouth prioritized the bill.
Valuing Ag Land on Productivity
A bill offered by Sen. Steve Erdman of Bayard to change the way agricultural land is valued is on hold after the bill failed to advance on first round floor debate. Sen. Erdman’s LB 483 would change the valuation of agricultural land from a system based on comparable sales to a productivity/income capitalization approach. It’s uncertain if the Nebraska Farm Bureau-supported bill will be debated further this session. Generally, the Speaker of the Legislature won’t reschedule bills for further floor debate unless the bill’s introducer can demonstrate 33 votes in support of the measure, enough votes to end a filibuster.
A “Win” for Taxpayers
Local government entities will have to hold a public hearing and vote to collect additional property taxes generated by valuation increases under a bill passed by the Legislature and signed by the Governor. Under previous law, local governments could take windfall increases in property taxes resulting from increases in property valuations without gathering input from the public or voting to do so. LB 103 was introduced by Sen. Lou Ann Linehan of Elkhorn. The new requirements will apply to community colleges, counties, educational service units, learning communities, municipalities, natural resources districts, sanitary and improvement districts, and school districts. Nebraska Farm Bureau supported the bill.