Responding to the COVID-19 Crisis: the Next 90 Days

Our Goal: Protect the health, safety, and economic opportunity of all Nebraskans.

Our Approach: As Nebraska’s Directed Health Measures are eased, working Nebraskans will need new and safe opportunities in a changed economy. For Nebraska to experience a full economic recovery, it will require a fertile environment for new businesses to start and existing firms to create jobs that meet the public’s needs as we live and work with continued social distancing guidelines. Nebraska policymakers should focus on promoting free enterprise and entrepreneurship to achieve these goals.

Actions State Government Should Take

• Transparency for Federal funds sent to the state. The federal government has allocated more than $1.25 billion in COVID-19 relief funds to Nebraska and will possibly send more in future legislation. Nebraskans and policymakers need to know how these tax dollars are being spent.  This information should be made publicly available via the state’s budget website or another medium.
• Keep the budget funded, balanced, and able to provide core services by reprioritizing government spending to focus on crisis response. Now is not the time to be creating new programs. Proper management of federal funds and shoring up the state’s existing commitments is essential for navigating the uncertainties ahead and to prevent current or future tax increases that would delay Nebraska’s recovery. If allowable under Federal guidance, relief monies should be used for:

1. Immediate COVID-19 emergency needs,
2. Filling holes in revenues directly impacted from the crisis (income and sales taxes),
3. Sending money to local governments for revenues directly impacted from the crisis (local sales, occupation taxes, licensing fees, etc.), and
4. Replenishing the state’s cash reserve fund and unemployment insurance funds.

• CARES Act tax policy conformity. Nebraska is a rolling conformity state, so there is no state action needed to accept the tax changes in the CARES Act. Allowing conformity to occur is important because the changes provide for the carryback of 2018-2020 net operating losses for five years. This was done to increase liquidity to ensure firms survive a large decline in cash flow amid the pandemic. If this tax change is made with a negative impact to Nebraska tax collections (fiscal note), it should be offset using part of the $1.25 Billion sent to the state as this should qualify based on Treasury Guidance[2].
• Enact an immediate hiring freeze and do not replace retirees and resignations.  Eliminate positions that have been vacant for six months prior to the COVID-19 outbreak. Reallocate employees across agencies where possible.
• Advocate to federal leaders for flexibility. Under current U.S. Treasury guidance regarding the $150 billion provision in the CARES Act, “Funds may not be used to fill shortfalls in government revenue to cover expenditures…” The Platte Institute has advocated for this flexibility and we encourage the state of Nebraska to do the same to aid in the recovery from this pandemic.

Actions Local Government Should Take

• Waive penalties and interest on late property tax payments. Many Nebraskans have lost their jobs, and property taxes should have flexibility for payment just as the state gave flexibility on income tax payment. Local taxing political subdivisions should use their cash reserve funds to manage operating costs.
• Temporarily suspend occupation tax collections or reduce the amount owed. If the state or federal government allocates funds to local political subdivisions for provisions made in response to the COVID-19 crisis, those monies should be used to replace this lost revenue.
• Enact an immediate hiring freeze and do not replace retirees and resignations. Eliminate positions that have been vacant for six months prior to the COVID-19 outbreak. Reallocate employees across departments where possible.
• Have local permitting function as “shall issue” so that businesses can re-open without having to wait for things like inspections to be completed or applications to be processed.
• Streamline initial permits and waive initial permit fees for newly-proposed businesses to help lessen cash flow issues for the duration of measures preventing businesses from operating at 100% capacity.
• Transparency with federal or state money sent. Nebraska local political subdivisions have received a great deal of tax dollars directly from the federal government and/or from the state. These dollars should be easily itemized so citizens can see how money is being spent in their communities. This needs to be plainly posted on the political subdivision’s website or other medium for communication to the public. For example, this should include (but is not limited to):
  • Education Stabilization Funds[3] sent to:
    • K-12 schools – $65,085,000
    • Higher Education– $66,159,000
    • Governor’s emergency education grants – $16,380,000
  • Transit Infrastructure Grants[4] sent to:
    • Lincoln – $9,845,106
    • Omaha (NE portion) – $21,884,422
    • Grand Island – $2,187,878
    • Sioux City (IA/NE/SD) – $748,172
  • Airport Improvement funds[5] sent to 72 Nebraska airports amounting to $64,602,994