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LEGISLATURE OF NEBRASKA
ONE HUNDRED EIGHTH LEGISLATURE
SECOND SESSION
LEGISLATIVE BILL 388
FINAL READING
Introduced by Linehan, 39.
Read first time January 12, 2023
Committee: Revenue
1 A BILL FOR AN ACT relating to revenue and taxation; to amend sections
2 13-518, 13-519, 13-2817, 29-3933, 72-2305, 72-2306, 77-2704.24, and
3 77-27,142, Reissue Revised Statutes of Nebraska, sections 77-382,
4 77-1776, 77-2602, 77-2701.16, 77-27,144, 77-3446, 77-4602, and
5 81-12,193, Revised Statutes Cumulative Supplement, 2022, and
6 sections 77-1632, 77-1633, 77-1701, 77-2701, 77-2701.02, 77-2701.04,
7 77-2715.07, 77-4008, 77-6702, 77-6703, 79-3403, and 79-3406, Revised
8 Statutes Supplement, 2023; to adopt the Property Tax Growth
9 Limitation Act, the Advertising Services Tax Act, and the Property
10 Tax Relief Act; to change provisions relating to budget limitations,
11 the Property Tax Request Act, and tax statements; to change the rate
12 and distribution of the cigarette tax; to change provisions relating
13 to the sales tax rate; to impose sales tax on certain services; to
14 define a term; to eliminate certain sales tax exemptions; to change
15 the earned income tax credit; to change provisions relating to the
16 base limitation, a tax on electronic nicotine delivery systems,
17 certain transfers of excess General Fund receipts, the Nebraska
18 Property Tax Incentive Act, and the School District Property Tax
19 Limitation Act; to harmonize provisions; to provide an operative
20 date; to repeal the original sections; to outright repeal section
21 77-2704.38, Reissue Revised Statutes of Nebraska; and to declare an
22 emergency.
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1 Be it enacted by the people of the State of Nebraska,
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1 Section 1. Sections 1 to 8 of this act shall be known and may be
2 cited as the Property Tax Growth Limitation Act.
3 Sec. 2. For purposes of the Property Tax Growth Limitation Act:
4 (1) Approved bonds means bonds as defined in subdivision (1) of
5 section 10-134 that are approved according to law, excluding any bonds
6 issued to finance a project or projects if the issuance of bonds for such
7 project or projects was the subject of a general obligation bond election
8 held at the most recent regularly scheduled election and was not approved
9 at such election;
10 (2) Auditor means the Auditor of Public Accounts;
11 (3) Consumer price index percentage means the annual percentage
12 change in the Consumer Price Index for All Urban Consumers published by
13 the federal Bureau of Labor Statistics, as reported for December of the
14 prior calendar year for the preceding twelve-month period;
15 (4) Emergency means an emergency, as defined in section 81-829.39,
16 for which a state of emergency proclamation or local state of emergency
17 proclamation has been issued under the Emergency Management Act;
18 (5) Growth percentage means the percentage obtained by dividing (a)
19 the political subdivision's growth value by (b) the political
20 subdivision's total property valuation from the prior year;
21 (6) Growth value means the increase in a political subdivision's
22 total property valuation from the prior year to the current year due to
23 (a) improvements to real property as a result of new construction and
24 additions to existing buildings, (b) any other improvements to real
25 property which increase the value of such property, (c) annexation of
26 real property by the political subdivision, (d) a change in the use of
27 real property, and (e) any increase in personal property valuation over
28 the prior year;
29 (7) Political subdivision means any county, city, or village;
30 (8) Property tax request means the total amount of property taxes
31 requested to be raised for a political subdivision through the levy
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1 imposed pursuant to section 77-1601;
2 (9) Property tax request authority means the amount that may be
3 included in a political subdivision's property tax request as determined
4 pursuant to the Property Tax Growth Limitation Act; and
5 (10) State aid means:
6 (a) For all political subdivisions, state aid paid pursuant to
7 sections 60-3,202 and 77-3523 and reimbursement provided pursuant to
8 section 77-1239;
9 (b) For cities and villages, state aid to cities and villages paid
10 pursuant to sections 39-2501 to 39-2520, 60-3,190, and 77-27,139.04 and
11 insurance premium tax paid to cities and villages; and
12 (c) For counties, state aid to counties paid pursuant to sections
13 60-3,184 to 60-3,190, insurance premium tax paid to counties, and
14 reimbursements to counties from funds appropriated pursuant to section
15 29-3933.
16 Sec. 3. (1) Except as otherwise provided in the Property Tax Growth
17 Limitation Act, for fiscal years beginning on or after July 1, 2024, a
18 political subdivision's property tax request for any year shall not
19 exceed its property tax request authority as determined under this
20 section. The preliminary property tax request authority for each
21 political subdivision shall be the amount of property taxes levied by the
22 county board of equalization pursuant to section 77-1601 for such
23 political subdivision in the prior fiscal year.
24 (2) In addition to the preliminary property tax request authority,
25 the political subdivision's property tax request authority may be
26 increased by the product of:
27 (a) The amount of property taxes levied in the prior year increased
28 by the political subdivision's growth percentage, less the sum of
29 exceptions utilized in the prior year pursuant to subdivisions (1) and
30 (2) of section 4 of this act; and
31 (b) The greater of three percent or the percentage change in the
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1 consumer price index percentage.
2 Sec. 4. A political subdivision may increase its property tax
3 request authority over the amount determined under section 3 of this act
4 by:
5 (1) The amount of property taxes budgeted for approved bonds;
6 (2) The amount of property taxes needed to respond to an emergency
7 declared in the preceding year, as certified to the auditor;
8 (3) The amount of unused property tax request authority determined
9 in accordance with section 6 of this act;
10 (4) The amount of property taxes budgeted in support of (a) a
11 service relating to an imminent and significant threat to public safety
12 or public health that (i) was not previously provided by the political
13 subdivision and (ii) is the subject of an agreement or a modification of
14 an existing agreement executed after the operative date of this act,
15 whether provided by one of the parties to the agreement or by an
16 independent joint entity or joint public agency or (b) an interlocal
17 agreement relating to public safety;
18 (5) The increase in property tax request authority approved by the
19 legal voters as provided in section 5 of this act; and
20 (6) The amount of property taxes needed to implement a six percent
21 increase in compensation for understaffed law enforcement officer,
22 firefighter, or corrections officer positions. For law enforcement
23 officer positions, understaffing shall be determined using the strength
24 of force numbers established by the Nebraska Commission on Law
25 Enforcement and Criminal Justice. For firefighter positions,
26 understaffing shall be determined using National Fire Protection
27 Association Standard 1710. For corrections officer positions,
28 understaffing shall be deemed to exist if the ratio of inmates to direct
29 custody staff exceeds fifteen to one for all shifts. The six percent
30 increase in compensation authorized in this subdivision shall only be
31 applicable to the increase in compensation related to filling currently
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1 vacant positions and shall be in addition to any percentage increase in
2 such compensation obtained pursuant to section 3 of this act.
3 Sec. 5. (1) A political subdivision may increase its property tax
4 request authority over the amount determined under section 3 of this act
5 if such increase is approved by a majority of legal voters voting on the
6 issue at an election described in subsection (2) of this section. Such
7 issue shall be placed on the ballot (a) upon the recommendation of the
8 governing body of such political subdivision or (b) upon the receipt by
9 the county clerk or election commissioner of a petition requesting such
10 issue to be placed on the ballot which is signed by at least five percent
11 of the legal voters of the political subdivision. The recommendation of
12 the governing body or the petition of the legal voters shall include the
13 amount by which the political subdivision would increase its property tax
14 request authority over and above the amount determined under section 3 of
15 this act.
16 (2) Upon receipt of such recommendation or legal voter petition, the
17 county clerk or election commissioner shall place such issue on the
18 ballot at the next regularly scheduled election. The election shall be
19 held pursuant to the Election Act, and all costs shall be paid by the
20 political subdivision. The issue may be approved on the same question as
21 a vote to exceed the levy limits provided in section 77-3444. If a
22 majority of the votes cast on the issue are in favor of increasing the
23 political subdivision's property tax request authority, the political
24 subdivision shall be empowered to do so.
25 Sec. 6. A political subdivision may choose not to increase its
26 total property taxes levied by the full amount of the property tax
27 request authority allowed in a particular year. In such cases, the
28 political subdivision may carry forward to future budget years the amount
29 of unused property tax request authority, but accumulation of unused
30 property tax request authority shall not exceed an aggregate of five
31 percent of the total property tax request authority from the prior year.
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1 Sec. 7. The auditor shall prepare forms to be used by political
2 subdivisions for the purpose of calculating property tax request
3 authority and unused property tax request authority. Each political
4 subdivision shall calculate such amounts and submit the forms to the
5 auditor on or before September 30 of each year. If a political
6 subdivision fails to submit such forms to the auditor or if the auditor
7 determines from such forms that a political subdivision is not complying
8 with the limits provided in the Property Tax Growth Limitation Act, the
9 auditor shall notify the political subdivision and the State Treasurer of
10 the noncompliance. The State Treasurer shall then suspend distribution of
11 state aid allocated to the political subdivision until the political
12 subdivision complies. The funds shall be held for six months. If the
13 political subdivision complies within the six-month period, it shall
14 receive the suspended funds. If the political subdivision fails to comply
15 within the six-month period, the suspended funds shall be forfeited and
16 shall be redistributed to other recipients of the state aid or, in the
17 case of homestead exemption reimbursement, returned to the General Fund.
18 Sec. 8. The auditor may adopt and promulgate rules and regulations
19 to carry out the Property Tax Growth Limitation Act.
20 Sec. 9. Sections 9 to 13 of this act shall be known and may be
21 cited as the Advertising Services Tax Act.
22 Sec. 10. For purposes of the Advertising Services Tax Act:
23 (1) Any term shall have the same meaning as used in Chapter 77,
24 article 27, except as otherwise defined in the Advertising Services Tax
25 Act;
26 (2) Advertising services means all services, including digital
27 advertising services, directly related to the creation, preparation,
28 production, or dissemination of advertisements. The term includes, but is
29 not limited to, layout, art direction, graphic design, mechanical
30 preparation, production supervision, placement, and rendering advice to a
31 client concerning the best methods of advertising that client's products
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1 or services. The term also includes online referrals, search engine
2 marketing and lead generation optimization, web campaign planning, the
3 acquisition of advertising space in the Internet media, and the
4 monitoring and evaluation of website traffic for purposes of determining
5 the effectiveness of an advertising campaign. The term does not include
6 web hosting services and domain name registration or the services of a
7 news media entity;
8 (3) Assessable base means the portion of gross advertising revenue
9 that is derived from sales to customers where services are delivered
10 within Nebraska according to the sourcing rules in this subdivision.
11 Gross advertising revenue is within this state if the audience of the
12 advertising is within this state according to the IP address of the
13 device where advertising is being viewed or, if the IP address location
14 is unavailable, the use of another reasonable method to source the
15 advertising revenue to this state based on the location of the viewer. If
16 the audience is based both within and without this state based on the
17 sourcing rules described in this subdivision, the gross advertising
18 revenue is apportioned between this state and other states in proportion
19 to the location of the viewers within this state as compared to the other
20 states. The Tax Commissioner may adopt and promulgate rules and
21 regulations determining the state from which gross advertising revenue is
22 derived;
23 (4) Digital advertising services means advertising services on a
24 digital interface. The term includes advertisements in the form of banner
25 advertising, search engine advertising, interstitial advertising, and
26 other comparable advertising services;
27 (5) Digital interface means any type of software, including any part
28 of an Internet website or application that a user is able to access;
29 (6) Gross advertising revenue means income or revenue from
30 advertising services sourced to the United States using the sourcing
31 rules described in subdivision (3) of this section before any expenses or
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1 taxes, computed according to generally accepted accounting principles;
2 (7) IP address means a unique string of characters or other
3 id