LINCOLN — Gov. Pete Ricketts warned Monday that when the Nebraska Legislature resumes its session in July, lawmakers might need to adjust their expectations because of the economic hit delivered by the coronavirus.
That goes for two of the top issues being debated before lawmakers suspended their work in March — property tax relief, and replacing the state’s main business incentive program.
“We’re going to have to adjust expectations,” Ricketts said. “There’s not going to be as much money in the near term to be able to do the things we thought we would be able to do.”
Earlier Monday, State Sen. Jim Scheer of Norfolk, the speaker of the Legislature, announced that state lawmakers will be called back to work on July 20 to resume the 2020 session, which was suspended on March 17 because of COVID-19 concerns.
Scheer said he picked July 20 because of the “current belief” that the state would be past its peak of COVID-19 cases by then. But the speaker said he would amend the schedule if there is a resurgence of the virus in midsummer once restrictions have been loosened.
Before the session was abruptly halted, senators were moving toward a high-stakes showdown over the perennial issue of high property taxes — a key priority of farm groups. That issue had been linked with a bill that would replace the state’s business incentive program, the Advantage Act, which was a top priority of the state’s business groups.
A key player in the battle over the two issues, State Sen. Lou Ann Linehan of Elkhorn, said she agrees with the governor that “we have to live in reality land” when it comes to spending, but she thinks it’s too early to say that expectations need to be lowered. By July, Linehan said, the state will have a much better idea of the hit on tax revenues delivered by COVID-19.
“It’s silly to guess now,” she said.
One rural senator, Tom Briese of Albion, said he’s willing to consider paring back the main property tax proposal before the Legislature in the first year, but the goal — to produce $300 million in property tax relief by year three — needs to remain the same.
“I’m not lowering my expectations,” he said.
The two senators, as well as the governor, said lowering property taxes remains a top priority, and might be more urgent now. As for business incentives, the Advantage Act is scheduled to expire at the end of the year, which economic development officials have said would leave Nebraska as one of the few states without tax breaks to spur business investments.
The rise in unemployment, coupled with plummeting prices for grain and livestock, caused by the coronavirus crisis has state fiscal officers bracing for a shock. In April, state tax receipts plunged 46%, though officials said much of that was caused by moving the deadline for paying state income taxes from April 15 to July 15, so the actual impact won’t be known until later.
Scheer, in an email to state senators on Monday, included a warning about the need to reduce or eliminate the fiscal impact of lawmakers’ priority bills.
“It will be to your benefit to look for a way to eliminate or minimize the general fund impact given the uncertainty of the economic forecast picture in mid-July,” he said.
Nineteen days were left in the 60-day session when it was suspended on March 17. Lawmakers returned during the week of March 23 to pass an $83.6 million emergency appropriation for the state’s response to COVID-19.
Scheer, in his email, said the rescheduled session would end on Aug. 13.