Nebraska likely out of time to 'decouple' from costly federal tax change

The World-Herald’s Statehouse reporters round up news highlights from the Legislature and state government into the Capitol Digest — a daily briefing for the political newshound with a busy schedule.

Time, apparently, ran out on a last-minute effort to “decouple” from one of the tax cuts afforded to businesses via the federal Coronavirus Aid, Relief and Economic Security Act.

State Sen. Sue Crawford of Bellevue sought to amend a bill so Nebraska — which usually automatically adopts any federal tax change — would decline to implement one of the provisions, which would allow businesses to deduct excess losses. If Nebraska did that, it would bring in an additional $82 million in revenue next year — much-needed revenue, Crawford said, if the state is going to afford the $125 million in additional property tax relief that appears on its way to passage.

But several senators said it would be wrong to renege on a tax break that businesses were already counting on. If Nebraska decoupled, companies would have to refile their income taxes this year and would see it as a tax increase, said Sen. Lou Ann Linehan of Elkhorn.

The limited liability companies and S-corporations affected by the tax change are mostly, but not always, family-owned companies, Linehan said.

But senators adjourned for the weekend before getting to vote on Crawford’s amendment. That likely kills the idea for the year, as only three days remain in the 2020 session.

Unusual motion. Sen. Justin Wayne of Omaha has been educating the Legislature on its own rules this session through a variety of motions. Now, he’s filed a rare motion to skip first- and second-round debate on one of his bills so that the body would have to vote only once to approve it.

The bill is called the Nebraska ImagiNE Small Business and Urban Revitalization Act. Its aim is to spur business growth in high-poverty areas. Wayne has complained loudly this session that the Legislature’s efforts to cut property taxes and provide new tax breaks for businesses don’t help entities in his northeast Omaha district.

Bills in the Legislature require three rounds of approval before being sent to the governor for signing. But Wayne’s motion, which will probably come up Tuesday, would suspend the rules so a final vote could be taken on Legislative Bill 1218 without the first two rounds of debate and approval.

The end of a legislative session is when you usually see some unusual moves to get bills approved before time runs out.

State budget adjustments. Gov. Pete Ricketts on Thursday signed the budget adjustments passed by state senators during their resumed session.

The adjustments include $55 million for flood repairs from last year’s bomb cyclone; $10 million for rural workforce housing grants; and $3.8 million to help repair a collapsed irrigation tunnel that fed water to farmland in Nebraska’s Panhandle.