
Gov. Pete Ricketts testified Friday before the Legislature's Revenue Committee in support of one of his priorities— a bigger tax break on military retirement income.
LINCOLN — A year after passing a 50% state tax break on military retirement income, Gov. Pete Ricketts joined veterans and military officials on Friday in calling for expanding that exemption to 100%.
Five of Nebraska’s six neighboring states exempt all military retirement pay from state income taxes, and Ricketts said that if this state wants to remain competitive in attracting military retirees and new missions at Offutt Air Force Base, it needs to make its tax break more generous.
Nebraska has a workforce shortage that, he said, could be partially remedied if more highly skilled service members stayed or moved to the state upon retirement.
“This is an important workforce development tool for the State of Nebraska,” Ricketts told the Legislature’s Revenue Committee. “We need to hold onto these folks.”
The governor said data shows that Nebraska is losing the battle. Its rate of growth in such “working veterans” has been only 2.7% in recent years, Ricketts said, compared with growth rates of 12% in South Dakota and 6.5% in Iowa, two states that do not apply state income tax to military retirement benefits.
Nebraska has 14,618 veterans who qualify for military retirement pay, which typically requires 20 years of service. Legislative Bill 387, which was introduced by State Sen. Tom Brewer of Gordon and 10 co-sponsors, is part of Ricketts’ stated goal of making Nebraska the “most military-friendly” state.
Brewer amended last year’s proposal, LB 153, from a total exemption to a 50% exemption. The move was made at the request of the governor, in deference to higher-priority tax bills, including one that provided a new state income tax credit on property taxes paid. LB 153 passed, but Brewer said a total exemption is needed.
Major Gen. Daryl Bohac, the head of the Nebraska National Guard, said having a generous tax climate for the military and its retirees is one of the factors considered when deciding where to locate facilities.
It was recently announced that Alabama was the preferred choice for the headquarters of the U.S. Space Command, but Ricketts and others believe that the decision will be revisited by the Biden administration and that Offutt still has a chance to host the facility.
The Revenue Committee was told Friday that passing LB 387 would give Nebraska a leg up against another state competing for the Space Command HQ, Colorado, because it is the only neighboring state that doesn’t fully exempt military retirement benefits from income taxes.
No one testified in person against the bill, which drew a parade of supporters, including active and retired military members, and representatives of veterans organizations.
But two think tanks that study tax issues did not support LB 387 in written testimony.
The Platte Institute, which was co-founded by Ricketts, was neutral on the bill. Nebraska’s high property taxes, it said, are uncompetitive with other states competing to attract veterans, and that would not change under LB 387.
The Open Sky Policy Institute said that the “well intentioned” bill would reduce state tax revenue, harming government services, and that there is no proof that tax cuts affect migration.
Open Sky added that some military retirees earn six-figure incomes as consultants and can well afford to pay state income taxes. The organization suggested targeting low- and middle-income retirees.
The Revenue Committee took no action on LB 387 after the public hearing.
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Correction: An earlier version of this story misstated the number of veterans in Nebraska who qualify for military retirement pay.
Meet the current Nebraska state senators

Nebraska has 49 state senators in the Legislature. Click through to find your state senator and others.

State Sen. Julie Slama
District: 1
From: Peru
Party: Republican

State Sen. Robert Clements
District: 2
From: Elmwood
Party: Republican

State Sen. Carol Blood
District: 3
From: Bellevue
Party: Democratic

State Sen. Robert Hilkemann
District: 4
From: Omaha
Party: Republican

State Sen. Mike McDonnell
District: 5
From: Omaha
Party: Democratic

State Sen. Machaela Cavanaugh
District: 6
From: Omaha
Party: Democratic

State Sen. Tony Vargas
District: 7
From: Omaha
Party: Democratic

State Sen. Megan Hunt
District: 8
From: Omaha
Party: Democratic

State Sen. John Cavanaugh
District: 9
From: Omaha
Party: Democratic

State Sen. Wendy DeBoer
District: 10
From: Bennington
Party: Democratic

State Sen. Terrell McKinney
District: 11
From: Omaha
Party: Democratic

State Sen. Steve Lathrop
District: 12
From: Omaha
Party: Democratic

State Sen. Justin Wayne
District: 13
From: Omaha
Party: Democratic

State Sen. John Arch
District: 14
From: La Vista
Party: Republican

State Sen. Lynne Walz
District: 15
From: Fremont
Party: Democratic

State Sen. Ben Hansen
District: 16
From: Blair
Party: Republican

State Sen. Joni Albrecht
District: 17
From: Thurston
Party: Republican

State Sen. Brett Lindstrom
District: 18
From: Omaha
Party: Republican

State Sen. Mike Flood
District: 19
From: Norfolk
Party: Republican

State Sen. John McCollister
District: 20
From: Omaha
Party: Republican

State Sen. Mike Hilgers
District: 21
From: Lincoln
Party: Republican

State Sen. Mike Moser
District: 22
From: Columbus
Party: Republican

State Sen. Bruce Bostelman
District: 23
From: Brainard
Party: RepublicanÂ

State Sen. Mark Kolterman
District: 24
From: Seward
Party: Republican

State Sen. Suzanne Geist
District: 25
From: Lincoln
Party: Republican

State Sen. Matt Hansen
District: 26
From: Lincoln
Party: Democratic

State Sen. Anna Wishart
District: 27
From: Lincoln
Party: Democratic

State Sen. Patty Pansing Brooks
District: 28
From: Lincoln
Party: Democratic

State Sen. Eliot Bostar
District: 29
From: Lincoln
Party: Democratic

State Sen. Myron Dorn
District: 30
From: Adams
Party: Republican

State Sen. Rich Pahls
District: 31Â
From: Omaha
Party: Republican

State Sen. Tom Brandt
District: 32
From: Plymouth
Party: Republican

State Sen. Steve Halloran
District: 33
From: Hastings
Party: Republican

State Sen. Curt Friesen
District: 34
From: Henderson
Party: Republican

State Sen. Raymond Aguilar
District: 35Â
From: Grand Island
Party: Republican

State Sen. Matt Williams
District: 36
From: Gothenburg
Party: Republican

State Sen. John Lowe
District: 37
From: Kearney
Party: Republican

State Sen. Dave Murman
District: 38
From: Glenvil
Party: Republican

State Sen. Lou Ann Linehan
District: 39
From: Elkhorn
Party: Republican

State Sen. Tim Gragert
District: 40
From: Creighton
Party: Republican

State Sen. Tom Briese
District: 41
From: Albion
Party: Republican

State Sen. Mike Groene
District: 42
From: North Platte
Party: Republican

State Sen. Tom Brewer
District: 43
From: Gordon
Party: Republican

State Sen. Dan Hughes
District: 44
From: Venango
Party: Republican

State Sen. Rita Sanders
District: 45
From: Bellevue
Party: Republican

State Sen. Adam Morfeld
District: 46
From: Lincoln
Party: Democratic

State Sen. Steve Erdman
District: 47
From: Bayard
Party: Republican

State Sen. John Stinner
District: 48
From: Gering
Party: Republican

State Sen. Jen Day
District: 49Â
From: Omaha
Party: Democratic
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