Platte Institute Legislative Issue Guide: The 107th Legislature

Platte Institute Legislative Issue Guide: The 107th Legislature

Click here to download the Legislative Issue Guide in PDF format. Click below to advance to a section:

Occupational Licensing Reform
Transparency and Good Governance
Truth in Taxation
Additional Platte Institute Resources


As we enter the 2021 legislative session in Nebraska, elected officials are faced with the daunting and possibly overwhelming task of developing informed positions on dozens of public policy issues during the COVID-19 pandemic. The pandemic makes a lawmaker’s job much harder because they must maximize our state’s ability to grow economically today and in the future, while also keeping public health and safety at the forefront.

The Platte Institute Legislative Issue Guide provides a concise and easily digestible public policy guide for state and local officials. The topics included in this guide are the second edition to what we anticipate being an ongoing series of public policy discussions in Nebraska.

In this guide we will discuss occupational licensing reform, regulations, good governance, and transparency, as well as the state’s many different types of taxes. What unifies the Platte Institute’s analysis of all these issues is our fundamental commitment to free markets, private property rights, individual liberty, and limited government. The overarching goal of our recommendations is to advance these ideals so the citizens of Nebraska will not only be freer, but also more prosperous.

Each of these entries is meant to be an introduction. For readers wanting more detailed analyses of the topics here, we offer several additional resources in a reference section at the end of this guide.

Occupational Licensing Reform

Key Facts

  • Nearly 200 different jobs in Nebraska require a government license.
  • Many of Nebraska’s job licensing requirements are more burdensome than our neighboring states.
  • In 2018, the Occupational Board Reform Act (OBRA) was passed as LB299 in the Nebraska Legislature, requiring legislative committees to review 20% of the licenses under their purview each year, in a continuous five-year cycle.
  • Licensing or regulation of employment is intended only to protect the public’s health, safety, or welfare (see Nebraska Revised Statutes §71-6221 and §84-946).

The Problems

Some level of regulation of some occupations will always be needed to protect the public’s health, safety, and welfare. In the 1950s, only about 5% of all workers required any type of state licensing; today, easily 20% of all workers need some kind of government permission slip to work in their chosen occupation.

Regulation of occupations occurs almost exclusively at the state level, meaning that the requirements to be recognized by each state can vary significantly. For instance, a cosmetology license can require anywhere from 1,000 to 2,100 class hours for licensure, in addition to the required exams. Massage therapy requirements range from 500 to 1,000 educational hours. Nebraska is on the high end of educational requirements for both.

Nebraska is always in need of highly skilled labor, but licensing requirements can dissuade some from making a move—either by themselves or with family members who might need licensing. In recent years, many states, including Nebraska, have recognized the problem of “accompanying spouse/family” in military homes being unable to put their skills to work after a move. In some occupations, those states have enacted a form of universal recognition, for spouses and family, allowing them to become licensed in Nebraska to perform jobs that they’ve performed in other states in the past.

Another group of people who are sometimes hamstrung by occupational licensing are those who have been convicted of crimes and/or been incarcerated. Rehabilitative efforts in correctional facilities—designed to train inmates in a useful trade they can use upon being released, or at least to spur interest in further training—are sometimes squashed when licensure is denied because of a criminal record.

Increasingly, interest groups bring new licensing proposals to legislatures around the country. Curiously, it is often the industry itself—currently mostly unregulated—which seeks licensure.

Finally, there are several problems common in the larger regulatory environment, as well: first, time and technology change things. Licenses that were created—whether for public safety or other reasons—30 years ago, may not have the same level of need today. Both licensing boards and legislators are slow to act to reduce regulation without a nudge.

Second, sometimes layering of regulations—including occupational ones—becomes so oppressive as to discourage people. For some occupations, there are federal regulations, which then require states to create their own licensing structure (for instance, in areas like banking). We believe that the state should tread carefully in these areas when it comes to piling on additional regulations. Likewise, real limits should be placed on efforts of city and county governments to impose more regulations on occupational practices than covered by the state.

Our Solutions

Universal Recognition

Universal recognition is recognized by a bipartisan group of governors and legislators as an advantage for attracting needed workers from out of state. With a universal recognition policy, Nebraska can welcome more workers and entrepreneurs, by recognizing their licensing and work experience without making applicants jump through too many more hoops.

Nine states (including Nebraska’s neighbors Colorado, Missouri and Iowa) have significant universal recognition policies, and at least a dozen other states have had bills introduced and advanced in the last two years. LB1187 was introduced late in the 106th Legislature and did not have time to be advanced from committee. This should be a high priority in the 107th Legislature.

Licensing and the Criminal Justice System

OBRA took a step in the right direction in allowing occupational boards to be petitioned by those with criminal convictions to determine whether anything in their background would prohibit them from being licensed, and requiring a response from the board (§84-947). An appropriate goal for the Legislature would be to expand that statute to include a requirement to consider the nature of the crime in the applicant’s conviction history, the length of time since conviction, age at time of offense, testimonials, and/or record of completion of rehabilitative programs.

In Nebraska, workers should not be automatically excluded from consideration for a state certification or license because of a previous conviction. Instead, the relationship of their offense to the license should be considered (e.g. someone who was convicted of child abuse might not be a good candidate for an early childhood teaching certificate). Other states adding in these provisions have required boards to consider age at time of the offense, length of time since the offense, evidence of rehabilitation, and so on.

Licensing Boards

Most licensing boards, in an attempt to avoid anti-trust questions, have at least one “public member” of the board. In other words, a member who is appointed by the governor, who has neither a financial nor professional interest in the board’s regulations, and has no one in their immediate family who does. However, human nature being what it is, that one member may be intimidated or pressured by professional colleagues, who outnumber them significantly.

In Arizona, SB1274, signed by Governor Doug Ducey in June of 2020, changed the membership of some of the licensing boards to majority civilian or public members. The Nebraska Legislature should consider similar action—especially for non-medical licensing boards—with the expectation that those not in the occupation may have a better sense of what actions must be taken for public health and safety than do those who may stand to gain financially. Recent research of state cosmetology boards also suggests that states with licensing boards that have fewer public members tend to impose greater licensing barriers for workers.

Sunrise Review

OBRA included a sunrise provision as introduced. It would have required—before new licenses were created, or new requirements for licensure added—that a review of the needs for the regulation or license be conducted, and analyzed in comparison to requirements in other states. In other words, a review which would take place before the regulations would be considered, so that policymakers were considering fuller information. Because a solution for conducting that review couldn’t be agreed upon, it was dropped from the bill as passed.

Legislators should consider creating some framework for conducting these reviews for all occupations. A version of sunrise review is already conducted for potential licenses that may be housed under the Department of Health and Human Services umbrella, through the state’s Credentialing Review Program, also known as 407.

Hard Sunset

Nebraska’s licensing review process found in OBRA is functionally a soft sunset or just a mandated regular review. Sunset provisions of legislation typically specify circumstances under which a law or regulation will automatically expire if an affirmative action to renew is not taken by the governing body.

Some states, like Ohio, have enacted a review process similar to Nebraska. However, under Ohio’s law, if the reviews are not done, and the licensing is not renewed by the legislature, the requirement for the job license goes away.

Nebraska legislators should look at ways to make the reviews less pro forma, and more of a critical analysis of the need for continued licensing.

Public Hearings/Transparency of OBRA Review Process

The goal of reviewing occupational licenses should not be to merely check off the box. The Legislature should actively seek information which will inform their views, not just from the licensing boards, but from practitioners, and from consumers of those who are licensed.

Although the 2020 interim was unusual due to the delayed conclusion of the session and the complications attendant with COVID-19, we encourage future committees to introduce their reviews for the year as Interim Studies resolutions, and would likewise recommend that each committee include their OBRA reviews in a committee interim studies hearing, or at the least to publicly solicit input from interested parties.


Top Five Takeaways for Policymakers When Considering Occupational Licensing

1. What is the problem that needs to be solved? If there’s no real and demonstrated problem, maybe it’s not necessary to regulate.

2. If the problem is external to government action, or if there is no guarantee that it would solve the problem, consider other non-legislative options—like bonding or insurance requirements.

3. State regulation/licensure shouldn’t necessarily be the first step to solving a problem (see the “inverted pyramid”).

4. Consider whether the consumer of the service can assess the quality of the services without state regulation through independent means, such as private certification, online reviews, personal experience—and whether their inability to assess poses a high risk to health or safety.

5. The focus when considering licensing should be on PUBLIC safety and health, not on occupational desires. Who benefits from new regulations? The public who is made safer, or practitioners whose competition is limited by limiting the free market?

For more information, see the Platte Institute’s “Job Licensing: Questions You Should Ask


Key Facts

  • Nebraska ranks 34th nationally in terms of regulations per capita when compared to the 44 states and the District of Columbia whose regulations have been quantified.
  • Nebraska has the third most regulations per capita when compared to its neighboring states.
  • Nebraska’s administrative code contains approximately 7.2 million words, which amounts to 95,955 restrictions enforced by 72 different agencies.
  • Nebraska state government collected $302.3 million in licensing fees, permitting fees, and other fees in 2017.
  • The cost of regulations to Nebraska’s private sector amounts to $473.8 million annually.

The Problem

Commonly referred to as “red tape,” excessive regulations have harmful effects on economic growth. In excess, regulations are a hidden tax on businesses and workers.

They are considered to be a hidden tax because 1) they can limit competition and create monopolies for existing businesses; 2) compliance with regulations can impose significant costs which ultimately lead to higher prices for consumers; and 3) their existence may be prohibitive in terms of introducing new business delivery models to the market.

Over the years, more and more regulations have been added at the state level, and this accumulation has increased the complexity and cost of doing business in Nebraska.

Our Solutions

While some regulation is necessary, Nebraska needs to make sure its regulations are not excessive to the point of inhibiting economic growth or imposing undue barriers for would-be entrepreneurs. Lessening the costs imposed by red tape frees up business revenue so that businesses can invest in improved equipment and technology, hire more employees, and compensate employees with higher wages.

There are different avenues for Nebraska to consider for improving its regulatory environment.

Make Temporary Regulatory Rollbacks Due to COVID-19 Permanent

The COVID-19 pandemic exposed the many outdated and unreasonable rules in existence that made it difficult for various industries to respond to the circumstances the pandemic presented. In response, many governors across the country, including our own, immediately executed a temporary repeal of regulations to help struggling businesses and the health care system.

In Nebraska, for example, restaurants and bars were only allowed to sell alcohol to be consumed within their establishments. During the pandemic, the sale of alcohol was permitted through takeout, delivery, curbside and drive-thru service options. Also, accessing telehealth services prior to the pandemic meant that individuals had to go to a hospital or clinic instead of being able to remain at home. During the pandemic, this requirement was lifted.

Many of these rules and regulations were not necessary in the first place, given their tendency to reduce innovation and access to health care. This temporary rollback of regulations during the public health crisis demonstrated that policymakers could continue to help businesses and improve access to health care in the future by making these rule changes permanent.

Sunset Provisions

A 2017 executive order required each Nebraska state agency to review all existing regulations. Although this did result in an overall 4.6% decrease in the number of restrictions in Nebraska’s regulatory code, there is no guarantee that the regulations that remain will not become obsolete in the future.

To make sure that Nebraska’s regulatory code remains pertinent and relevant to accomplishing its intent, policymakers should consider setting a periodic expiration date, or sunset, on its entire code. Agencies would need to review rules under their jurisdiction and be responsible for submitting rules that need to be kept to the regulatory review process prior to the sunset date in order to keep them.

Idaho and Rhode Island are examples of states that have instituted sunsets to help control their regulatory burden.

Regulatory Budgeting

Fiscal budgets exist to keep spending in check. It makes sense to apply this principle to regulations as well, since they typically come with monetary costs. Because Nebraska’s regulatory code has been inventoried and quantified, there now exists the ability to target the re-accumulation of new regulations moving forward.

Policymakers should place caps on the number of rules that can be issued by each agency subject to the Administrative Procedure Act. They could also require agencies to reduce their number of regulations by a certain percentage, such as 10% or 25%.

Acknowledging that new rules may be inevitable as future proposed legislation becomes law, agencies could be temporarily required to remove two regulations for each new one added until the budgeted goal is met.

Ohio and Virginia have taken this type of approach.

Economic Analysis of Regulation

Unlike laws, regulations are easier to make and are made by people who are not directly accountable to Nebraska voters. Under current Nebraska law, only the governor can stop a proposed agency rule or regulation from taking effect.

Some regulations can have major economic impacts. When the potential for a regulation to have a major economic impact exists, it should be evaluated separately from the executive branch, based on its effectiveness and impact to the state’s economy. This can be done through what is known as a REINS Act (Regulations from the Executive in Need of Scrutiny).

A REINS Act requires that economic cost estimates be prepared for newly proposed rules. The Legislature sets a cost threshold, and that threshold defines the level at which a rule is considered a major regulation. If the cost estimate exceeds the threshold, the Legislature is given the authority to prohibit a major regulation from going into effect if it is felt to have too significant of an impact on the state budget or if the benefits to the public do not outweigh the costs.

Wisconsin was the first state to enact a state-level REINS Act in 2017. Florida and New Hampshire have also enacted legislation with REINS-like provisions, requiring financial impact statements.

Regulatory Sandboxes

Regulatory sandboxes encourage innovation and entrepreneurship, by providing a temporary regulatory environment with fewer government restrictions for the testing of a new product or service, in exchange for supervision and information sharing with a regulatory agency. This allows firms to assess whether their product or service works as desired and whether it complies with the law.

Regulatory sandboxes are of particular benefit to private companies in industry sectors where industry standards are still being created. Regulatory sandboxes are gaining momentum in many industries, particularly the financial, legal, and technology industries.

During this temporary period, firms can run a trial of their business concept as long as consumer protections, such as freedom from deceptive practices and right to privacy, are maintained while testing their new product or service. Firms participating in sandboxes typically are required to compensate consumers should harm arise.

The first regulatory sandbox was launched in the United Kingdom, and interest has surfaced worldwide. In the United States, Arizona and Utah are leading the nation in the sandbox approach. The result is that major investors are going to those states for the opportunities that exist for their college graduates and entrepreneurs.

Transparency and Good Governance

What is good governance and how can governments better strive to achieve it?

While there is no single definition for good governance, one way to look at it is an analysis of public policy decisions and their outcomes. Arguably, good governance is considered the most important at the local government level, because it can increase civic engagement, resulting in the best options for the people of that community.

One of the fundamental principles of good governance is openness and transparency. Many state government agencies have moved towards more online transparency, but there is still a long way to go, especially at the local level. Many local units of government, including counties, cities, school districts, townships, natural resource districts, and libraries, have little, if any, information concerning the functions and costs of government available for citizens and taxpayers online.

Elected officials and administrators often believe their organization is transparent even while their websites are missing basic information such as meeting minutes, board packets, budgets, audits, expenditures, and legislatively required reports. For democracy to work, citizens need access to the information about what government does, and policymakers who come and go over time should have easy access to historical records.

Nebraska has made good strides implementing more transparency such as the occupational review process (LB299-2018), a revenue-based system to define local tax increases (LB103-2019) and requiring municipalities to report their occupation taxes (LB445-2019). While these are a good start, Nebraska should strive to establish more transparency in the most user-friendly and clearest way possible. Without comprehensive transparency standards, citizens and taxpayers are left in the dark about what government does and how much money it taxes and spends.

Providing information in a clear, complete, and easy-to-understand way prompts more accountability and openness. This is not a one-time action, but a philosophy, and constant improvement allows citizens and elected officials to help hold state and local government in check.

Transparency Checklist

A transparency checklist is a 10-point list of website transparency features that citizens in any part of Nebraska should be able to find when they visit the websites of counties, cities, school districts, and state agencies.

1. Contact Information:  To be able to participate fully in democracy, citizens need the ability to contact and interact with their elected representatives and government administrators.

2. Public Meetings:  Citizens should have the knowledge of when an elected body meets and what issues they will be voting on so they can be informed and engaged in the democratic process.

3. Public Information:  Citizens have a right to know how their tax dollars are being spent and how their government is operating.

4. Budgets:  Budget details serve as a way for taxpayers to determine how the government performed in relation to past years and allow citizens to hold government accountable to their plans in the past.

5. Audits:  An audit reveals whether elected officials kept their promises and enables constituents to hold them accountable.

6. Expenditures:  Having expenditure information online deters waste and abuse by government employees and increases the chances of rectifying problems once they occur.

7. Compensation:  Government employees work for and are paid by the taxpayers, and citizens have a right to know how their money is being spent.

8. Contracts:  Every local government agency should want to attract as many high-qualified bidders as possible when they submit a request for proposal out to the public. Posting this information online expands the marketplace for local governments to find the most qualified business at the best price.

9. Lobbying:  If a government belongs to any lobbying associations by paying association or membership dues, that information should be disclosed.

10. Taxes:  All tax information should be in a central location that is easily accessible and easy for citizens to notice when rates change.

This checklist is based on recommendations made by Ballotpedia’s Sunshine Review project.

Federalism and Federal Aid

Key Facts

  • Federalism concerns the division of power between states and the federal government.
  • Federal grants to states have increased from $24 billion in 1970 to $640.8 billion in 2015.
  • Nebraska receives an average 30% of its total budget from the federal government.
  • Nebraska has become increasingly dependent on federal funds, and if these funds were to be drastically reduced or stopped, the state would be unprepared to provide the essential government services these funds provide for Nebraskans.
  • Thirty-seven agencies or programs in Nebraska are funded with federal money. Eight of these agencies have over 50% of their budget coming from the federal government.

The Problem

Every state in the nation relies on the federal government for some portion of its budget, however, federal grants and aid are not a stable long-term source of revenue. In addition, burdensome regulatory strings are often attached to grants, which increases program costs to the state. Although Nebraska is in a better situation than most states because federal funds are appropriated through the budget process, there is still a lack of information and transparency when it comes to the details of those grants.

Economists have found that federal subsidies to the states lead to higher state taxes and spending in the long run because the federal “seed money” creates a demand for more government with current and future commitments. “Free” federal money isn’t really free. Every tax dollar Washington sends to Nebraska is a dollar taken from taxpayers in Nebraska and the other states.

Dependency on federal funds is an issue that simply cannot be ignored. In the event of future reductions in federal funding to Nebraska, it will be the Legislature that will be held responsible and answer for the needs of the state’s most vulnerable—the sick, poor, and elderly—as well as the state’s public infrastructure, public safety, and education. Many accounting professionals have warned that the unsustainable federal financial situation is not political, it is merely a matter of math, and that to ignore the responsibility to account for this risk is akin to government malpractice.

Our Solution

Nebraska needs to measure the federal funds coming into the state to have a clear picture of what effect they are having on state government. Nebraska must be prepared for the next financial crisis whether it’s because of a sequester, shutdown, or simply unsustainable funding levels.

To do this, Nebraska should conduct an inventory of all the federal funds being spent at the state level. This inventory would essentially be an audit that includes the details of each grant: how long the grant lasts, if there are any state matching requirements, or if there are any maintenance of effort requirements attached. The inventory should also ask state agencies receiving federal funds to create a contingency plan in the case of a hypothetical 10% and 25% reduction.

Utah, Idaho, Mississippi, and Indiana have implemented similar inventories, and some have already seen savings from the information provided through the federal funds inventory.


Key Facts

  • Defined benefit pension plans promise employees annual payments for life upon retirement, but if a public plan does not have enough money to make these payments, taxpayers are legally bound to fund the difference.
  • Omaha’s civilian employees already participate in cash balance plans, but the city’s police and fire unions have refused in negotiations to accept cash balance plans for new employees. Omaha actuarial reports state that the city is short on pension promises by more than $902 million, but pension experts believe that this figure is underestimated due to the city’s overly-optimistic assumptions on investment returns.
  • Lincoln’s police and fire pension’s unfunded liabilities are reported to be over $72 million but are likely underestimated due to overly optimistic long-term investment assumptions used to discount the value of promised pensions.

The Problem

In 1983, the Nebraska Legislature passed legislation mandating all municipalities, except for Omaha and Lincoln, to move all future employees out of defined benefit pension systems. Thankfully, because of that legislation, most municipal pension systems in Nebraska are in good standing. This is not the case in Omaha and Lincoln. The ever-increasing employer contributions required to pay for pension debt will almost certainly crowd out both cities’ capacity to finance other public services such as public safety, road repairs, and snow removal.

Because of the unfunded liabilities, Omaha has seen annual taxpayer contributions to the pension plans increase from $22.3 million in 2005 to over $76 million in 2018. Omaha also had its bond rating downgraded specifically due to the uncertainty of the growing unfunded pension liability.

In 2003, Lincoln’s contributions into the pension plan were just $2.6 million, and by 2019, this cost had increased by more than three times to $8.2 million.

Our Solution

Ideally, lawmakers would update Nebraska state law by including Omaha and Lincoln in municipal pension reforms for which the two major cities were excluded nearly 40 years ago. However, if that is not possible, city level reforms need to be implemented to reverse the trend of growing unfunded liabilities.

The three underlying causes of growth in Omaha and Lincoln’s pension debt are (1) the city not paying the full actuarially determined employer contribution to the pension systems, (2) market performance well below the plans’ assumed investment returns, and (3) undervaluing the amount of all promised future benefits to employees by using a discount rate that is too high.

Local Government Transparency and Debt

Key Facts

  • Nebraska local governments have more than $9.6 billion in total outstanding debt as of fiscal year 2020.
  • Local governments’ accounting practices are not uniform and may be contributing to the state’s high property tax burden.
  • Nebraska is home to 93 counties, 529 municipalities, 244 public school districts, and many other political subdivisions such as sanitary and improvement districts, community colleges, natural resource districts, and historical societies, among others. In total, there are 5,208 political subdivisions in the state of Nebraska, many of which receive audit waivers each year.
  • Only six cities and one county in Nebraska are following the accounting requirements established by the Governmental Accounting Standards Board (GASB)

The Problem

There are many legitimate needs facing local governments, but officials need to convince their citizens that they are spending wisely before imposing new taxes, fees, or other costs on residents. Fiscal transparency is necessary if local property taxes are to be sustainably reduced or kept under control in Nebraska. Even if the Nebraska Legislature were to enact significant property tax reforms, local spending will remain the primary driver of property taxes in the state.

In Nebraska, private, for-profit organizations adhere to uniform standards for their financial statements, known as Generally Accepted Accounting Principles, or GAAP. Nebraska’s local governments, however, are not subject to these same standards. Only six cities and one county have exceeded state standards and issue a Comprehensive Annual Financial Report (CAFR).

Not using uniform reporting standards and procedures creates a transparency problem for the users of local budget information as well. It makes it extremely difficult for residents or elected officials to see where their tax dollars are being spent, or if there is fiscal mismanagement. For Nebraskans to be effective in achieving long-term property tax reform, everyone must have the opportunity to know where the money is being spent through fiscal transparency and accounting uniformity.

Our Solution

Local taxing entities should put all debt to referendum votes concurrent with general or primary elections. Governments should also report the full financing costs and repayment plan for any debt before a vote and put the tax increases associated with the debt on the ballot.

The State of Nebraska should require that local governments use GAAP accrual basis accounting. If Nebraska local governments were required to follow GAAP accounting on an accrual basis, similar to that of the private sector, then it would give citizens and lawmakers a better picture of what was being spent and a more accurate current financial condition. Eventually, it would be ideal if all local governments issued a Comprehensive Annual Financial Report (CAFR), which is a set of financial statements for a governmental entity that comply with the accounting requirements established by the Governmental Accounting Standards Board (GASB). It must be audited by an independent auditor using generally accepted government auditing standards.

Truth in Taxation

Key Facts

  • Historically, local units of government with taxing authority defined tax increases by increased levy rates. If a property owner’s valuation increased, but the levy remained the same, a taxing authority could claim they did not raise taxes.
  • The Legislature unanimously approved LB103 in 2019, which was an important transparency and accountability measure for when local property tax increases might occur due to rising valuations.
  • LB103 created a revenue-driven system, not a levy rate-driven system. If valuation increases result in increased property tax collections, and the taxing authority wants to collect the resulting windfall, a separate public hearing must be scheduled to allow for citizens to learn about how the money is intended to be spent and allow for citizens to provide input.
  • LB103 as signed into law requires that these public hearings be posted in the newspaper at least 5 days before the hearing.

The Problem

Under current Nebraska law, local boards that set property tax levies must reduce their tax rates as property values rise, unless a separate public hearing and vote is held, allowing a property tax increase to move forward.

However, most Nebraskans likely are not aware of the 2019 law and the hearings it requires. Despite the requirement that these hearings be posted, a newspaper notice may not be adequate for dispersal of this information. Many local taxing entities in Nebraska have ignored the law and are not holding the required public hearings or notifying citizens when they are scheduled.

Our Solution

A Truth in Taxation law would require that taxing subdivisions wishing to exceed a revenue neutral levy rate provide notice of intent to do so directly to property taxpayers. They would be required to provide taxpayers at least a 10-day advance notice, either by mail or electronically, informing them of the upcoming public hearings where local political subdivisions will decide on property tax increases resulting from rising property values.

A Truth in Taxation law can provide taxpayers with a stronger voice in how local property taxes are decided by (1) providing the date, time, and location of all public meetings where property tax increases will be decided, (2) itemizing how much a property taxpayer’s tax bill would rise if the proposed tax increase were approved, and (3) requiring that hearings for property tax increases take place during hours when most taxpayers can attend a public meeting.

Utah is the model state for the taxpayer friendly Truth in Taxation law, while numerous other states have also implemented a version of the law including Illinois, Minnesota, Texas, and Arizona.


Over the last century, public finance scholars have explored the best way to raise revenue to pay for public services demanded by citizens. While there is still much debate, there is remarkable agreement on the general principles of sound tax policy. Simplicity, transparency, neutrality, and stability are all core principles of a good tax system; however, Nebraska has departed from some of these since the major tax change in 1967. Many tax practitioners and scholars agree that Nebraska’s tax system needs reform.

Reform cannot happen unless the principles of sound tax policy are at the forefront of the discussion. However, anyone that has been a part of the Nebraska policy debate on taxes knows that academic and theoretical ideals are often sacrificed due to the wide divergence between scholars’ and many stakeholders’ view of tax policy. It is important to know the economic facts behind tax policy and how Nebraska’s economy is being affected by its tax choices before substantial reform can be properly enacted.

Many arguments over taxes begin with the extent of how individuals and businesses will react. One of the earliest cited and seminal papers affirmed that citizens and businesses will choose a community that best suits their demands and compare the costs of government services across jurisdictions. This established the long-held fact that taxpayers “vote with their feet,” which explains why tax burdens influence migration.

Empirical research has determined that a state’s ability to attract, retain, and encourage business activity is considerably affected by its structure of taxation. Subsequent research found that tax increases significantly impede economic growth and that business taxes have a negative impact on start-ups. This is especially true for property taxes because they are paid regardless of profit. Another consensus among academics is that taxes negatively affect employment levels, with corporate income taxes having the most significant negative impact.

According to the Tax Foundation’s State Business Tax Climate Index, Nebraska ranks 28th best in the nation. This ranking is comprised of a corporate income tax ranking (31st), personal income tax (21st), sales tax (10th), property tax (41st), and an unemployment insurance ranking (11th).

The Platte Institute takes a principled, pro-growth approach to tax reform that focuses on broad bases and low rates. Nebraska’s current tax environment is hindering economic growth and contributing to the state’s outmigration. Nebraska is well positioned to create a more prosperous economic climate to not only keep residents, but to also attract residents from other states.

The Principles of Sound Tax Policy

Simplicity:  Tax codes should be easy for taxpayers to comply with and for governments to administer and enforce.

Transparency:  Tax policies should clearly and plainly define what taxpayers must pay and when they must pay it. Hiding tax burdens in complex structures should be avoided.

Neutrality:  Taxes should neither encourage nor discourage personal or business decisions. The purpose of taxes is to raise needed revenue, not to favor or punish specific industries, activities, and products.

Stability: Taxes should be structured to generate consistent and predictable revenues.

Property Tax

Key Facts

  • The effective property tax rate (1.65 percent) is the eighth highest in the country and the per capita property tax burden is 21% higher than the national average ($1,957 in Nebraska versus $1,617 nationally).
  • School districts make up more than 60% of the total property taxes paid across the various taxing subdivisions.
  • Over the past ten years, the amount of statewide tangible personal property tax collected as a percent of total property taxes has averaged 6.1%. In 2019, collections were $221.2 million. These taxes are levied only on business equipment and at the local level, while inventory is exempt.
  • Nebraska is one of only six states that levy an inheritance tax, with the highest top rate in the country at 18%.

The Problem

On a per capita, inflation-adjusted basis, property tax collections in Nebraska have never been higher than they are today. Nebraska needs permanent property tax reform that fixes the underlying problem of its high reliance on property taxes, not more temporary relief programs. For example, the recently enacted Property Tax Incentive Act (LB1107) provides a refundable income tax credit based on the amount of property taxes paid to the school district in the previous year, however, it does not actually lower the amount of property taxes collected.

While real estate taxes are high, there are also problems that exist with the taxes the state allows local governments to collect on other types of property. For example, there is a nationwide trend to move away from taxing tangible personal property because it is unsound economic policy. This tax discourages investment in machinery and equipment, which includes agricultural equipment, and imposes substantial compliance costs on Nebraska businesses, which ultimately reduces employment growth. The de minimus exemption for tangible personal property was repealed in LB1107. However, this exemption just excluded the first $10,000 worth of taxable liability on business equipment, it did not reduce the tax compliance or reporting burden.

Another property or wealth tax is the county inheritance tax. This tax can cause a breakup of a business or change investment decisions that lead up to one’s death. The local inheritance tax promotes tax avoidance and creative estate planning that are typically economically destructive. Having the nation’s highest inheritance tax also makes our state unwelcoming to retirees.

Our Solution

Reform is needed at the local level to structurally fix Nebraska’s property tax. Raising state income and sales tax rates to pay for local government has proven to have a detrimental effect on economic growth. To truly reform the state’s property tax system, all taxing subdivisions must come to the table, along with state lawmakers, and be willing to compromise on a solution that provides state funding for education and local functions, while reducing local taxing authority. While LB1107 (2020) was deemed the “Grand Compromise” it did not structurally change the property tax or reduce the actual property tax burden.

Under current law, Nebraska has property tax levy and rate limitations but no assessment limitation, which can be tightened as part of a reform package. There must also be limitations on the growth of property taxes and a reform of our state’s education funding and spending, since school districts comprise 60% of the property tax burden.

One of the best ways to spur investment in the state would be for the tax on tangible personal property to be repealed. If complete repeal is not possible, reform options should create a higher de minimus exemption, such as $50,000, so small businesses that are well under the threshold won’t have to be burdened with the effort associated with cataloging their equipment and filing. This allows most taxpayers to be taken off the rolls for a minimal cost. Nebraska should also repeal the inheritance tax. If not, reform should create a higher minimum threshold, such as $100,000, while reducing the top tax rate. Another option for replacing both of these taxes is to offer counties a local-option sales tax enacted by voter referendum to provide a more reliable alternate revenue source and to replace lost inheritance and tangible personal property tax revenue.

Personal Income Tax

Key Facts

  • Nebraska has one of the highest tax rates in the region with a top rate of 6.84% starting at $31,160 for single filers.
  • Personal income tax rates have changed 25 times since the income tax was first adopted in 1968.
  • Neighboring South Dakota and Wyoming do not tax income. Colorado has a flat rate. Kansas, Missouri, and Iowa all have graduated rates like Nebraska. Only Iowa imposes a higher top marginal rate, yet recently enacted reforms that will lower their top rate and the number of brackets.
  • Certain exemptions for Social Security and military pensions exist; however, retirement income is not exempt overall.
  • Most businesses (partnerships, sole proprietorships, LLCs and S corps) pay their income taxes through the personal income tax.

The Problem

Structurally, Nebraska’s personal income tax adheres to many principles of sound taxation, including a relatively broad base. However, taxation of a broad base should result in low statutory rates. Nebraska’s rates are one of the highest in the region. As a result, Nebraska has suffered outmigration and difficulty in attracting higher income residents, young professionals, and recent college graduates.

High personal income tax rates also make the state less attractive to businesses that are organized as partnerships, sole proprietorships, limited liability companies, S corporations, and other pass-through entities. Most businesses in the United States and new businesses are organized as pass-through entities instead of traditional C corporations. Pass-through entities are taxed at the shareholder level, and as a result, they are reluctant to expand or relocate to states with high personal income tax burdens. Academic studies have found that individual income taxes are among the most detrimental to economic growth.

Our Solution

Replace the four-rate progressive income tax that ranges from 2.46% to 6.84% with a flat-rate tax of 5% to become competitive within the region. This low flat rate will modernize the bias against work effort and productivity that plagues progressive rate structures. If a measure of progressivity is needed, a generous expansion of the standard deduction will retain that policy while not harming economic growth.

If a flat tax is not achievable, then every effort should be made to reduce the top marginal personal income tax rate. Neighboring states have decided to levy a low, flat rate or to forego individual income taxes altogether. This creates stiff regional competition on a comparative measure of tax structure. Scholars have found that higher marginal tax rates reduce gross state product growth and that reductions to top marginal rates are beneficial to long-term growth.

Corporate Income Tax

Key Facts

  • Forty-four states levy a corporate income tax, and of those, Nebraska is one of just 14 to adopt a graduated-rate system.
  • With a top rate of 7.81%, it is the highest rate west of the Missouri River apart from California.
  • Two neighboring states, South Dakota and Wyoming, forego corporate income taxes altogether, while Colorado and Missouri impose single-rate corporate income taxes. Both Iowa and Kansas levy graduated taxes, however, Iowa’s top rate will decline thanks to recently enacted reforms.
  • Corporate income taxes are among the most detrimental taxes to economic growth because they discourage work and the creation of wealth.

The Problem

Unlike most states, Nebraska’s corporate income tax has high graduated rates, and as a result, hinders the state’s economic competitiveness. This not only violates the principles of simplicity and neutrality, but it also incentivizes corporations to take part in counterproductive activities to circumvent the higher tax rate.

To counter the state’s high corporate tax rates, much of the corporate tax code is filled with deductions, exemptions, and credits which erode the tax base, and ultimately results in higher tax rates across the board. In addition, the state heavily relies on inefficient tax incentives to attract business to the state. These policies make it harder to earn corporate income tax revenue, which is why the corporate income tax accounted for approximately $423 million, or 7.6% of the state’s total tax revenue, in 2019.

Our Solution

Ideally, Nebraska’s corporate income tax should be repealed to boost investment in the state and eliminate unnecessary spending through exemptions, credits, deductions, and incentive packages. Some believe that the corporate tax adds a measure of progressivity to an otherwise regressive tax system. However, graduated corporate tax rates are inequitable because the size of a corporation bears no relation to the income level of its owners. Many studies by both practitioners and academics have found the tax falls primarily on workers in the form of lower wages and consumers in the form of higher prices.

However, if complete repeal is not possible, replace the graduated-rate progressive tax, which ranges from 5.58% to 7.81%, with a flat-rate tax of 5% to become competitive within the region. A single-rate system minimizes the incentive for firms to engage in economically wasteful tax planning to mitigate the damage of higher marginal tax rates.

Sales Tax

Key Facts

  • The Nebraska state sales tax rate is 5.5% while most cities, excluding Omaha, can levy up to 2% for a total maximum rate of 7.5%, not including any county taxes allowed under state law.
  • Much of the sales tax base excludes consumer services, which are a much larger share of the economy than when the sales tax was first implemented in 1967.
  • Business inputs should never be subject to sales tax because this leads to tax pyramiding.
  • Expanding the sales tax base improves neutrality, and newly generated revenues can be used to finance other tax reforms.

The Problem

Nebraska’s sales tax regime is in serious need of reform, and broadening the sales tax base is considered by many to be the most critical issue facing Nebraska public finance. The sales tax structure violates fundamental principles of sound tax policy, the most notable being neutrality. The United States and Nebraska have an increasingly service dominated economy, yet most of the services in Nebraska remain untaxed. Failure to levy the sales tax broadly forces the rate to be higher than it would be otherwise. In addition, the state is deciding which industries and products should have a tax advantage, which creates government-engineered market distortions.

Our Solution

Reform the sales tax base to include all personal consumption while excluding business purchases from the tax. This will allow the state to generate additional revenue to lessen the severity of other more harmful and burdensome taxes while improving the neutrality of the state’s tax structure.

Broadening the base has several advantages. The most notable are decreasing market distortions and raising substantially more revenue. In a vacuum, additional revenue would allow sales tax rates to be reduced. But that additional sales tax revenue could also be used to lower personal and corporate income tax rates or be used for property tax reform.

All personal consumption, including groceries, should be included in the sales tax base (prepared foods are already taxed). Many opponents will say this is regressive, however, research has shown that it is just the opposite. Federal law already exempts grocery purchases made using SNAP and WIC benefits from sales tax. Higher-income individuals tend to spend more on grocery purchases and are thus proportionally benefiting from the current exemption more than low-income taxpayers. Policy options that are better than a blanket exemption include using the increased revenue to reduce the overall sales tax rate or to create grocery tax credits for low-income taxpayers.

As part of the base expansion reform, the sales tax should never fall on business purchases. Taxing business inputs is among the most non-transparent ways to raise revenue because the tax is often passed on to customers in the form of higher prices. As a result, individuals are often paying the tax without knowing it. Taxing business inputs also leads to pyramiding where the tax is embedded multiple times into the final cost. Every public finance expert will confirm that a tax system including business inputs is unsound and has been proven to be a detriment to economic growth.

Excise Tax

Key Facts

  • Excise taxes are included in the final price of products and services and are often hidden to consumers.
  • Nebraska imposes excise taxes on several products, including alcoholic beverages, motor vehicle fuel, aircraft fuel, and tobacco products.
  • These are commonly referred to as a sin tax since they were originally created to alter consumers’ behavior.

The Problem

Excise taxes are applied to items specified by lawmakers, and in practice, an excise tax is based strictly on quantity; the consumer pays a flat amount per item. Studies show excise taxes are disproportionately borne by low-income taxpayers, making them one of the most regressive components of the state’s tax system.

Every year there are proposals to increase the cigarette tax and, in most years, there are proposals to increase other excise taxes or create new excise taxes. These proposals are done primarily to generate revenue for state operations. However, excise tax hikes for highly mobile products such as cigarettes or alcohol result in a momentary bump in revenue, followed by a falloff in collections in future years. Proponents of excise tax hikes claim the consumer’s behavior will be altered such as less alcohol consumption or less cigarette use. However, excise tax increases result in economically detrimental behavioral changes, such as cross-border shopping for alcohol and smuggling of cigarettes between low and high-tax states.

Our Solution

Excise taxes should not be increased because they do not positively alter consumer behavior and are an unstable revenue source. If excise taxes are to be used as a user fee, as is the case with gasoline, then collections should be used for that purpose alone and not redirected to other non-transportation associated activities.

More transparency needs to be incorporated so the taxpayer knows exactly how much they are paying. Currently, excise taxes are embedded into the total price of the product. When excise taxes are imposed on a purchase, such as on gasoline or tobacco products, consumers should be provided with an itemization of how much excise tax they were charged. This will allow the taxpayer to see how much is paid in every transaction.

Miscellaneous Taxes

Key Facts

  • Outside of the major tax categories, there are numerous other types of taxes assessed on various activities in Nebraska that are categorized as “miscellaneous.”
  • These include the insurance premium tax, documentary stamp tax, gaming tax, oil and gas severance tax, mechanical amusement device tax, conservation tax, among many others.
  • Some of these taxes are levied at both the state and local level, such as the occupation tax, lodging tax, and wireless taxes.

The Problem

Occupation taxes impair economic growth and are particularly harmful to businesses struggling to remain viable during recessions. State or local taxes known as occupation taxes may be imposed either on a business’ net worth (or accumulated wealth), or their gross receipts, penalizing investment, and requiring businesses to pay regardless of whether they make a profit. At the local level, this tax violates transparency and neutrality principles. In legal theory, these taxes are imposed on businesses, but in practice, the costs are passed onto consumers, and many taxpayers want more information about how these revenues are used.

Nebraska has the 4th highest wireless tax in the nation. Wireless service is increasingly the sole means of communications and connectivity for many Americans, particularly young people and those with lower incomes. Excessive taxes and fees on wireless impose a disproportionate burden on low-income consumers.

Our Solution

Repeal or reduce the state corporate occupation tax. Taxing a company based on its net worth disincentivizes the accumulation of wealth, or capital, which in turn can distort the size of firms and lead to harmful economic effects. Many other states have recognized the damaging effects of occupation (or capital stock taxes) and as a result, have reduced or repealed them altogether. In 2018, Nebraska’s 2-year total collections were only $13.7 million.

Reduce the various components that make up Nebraska’s wireless tax to be more aligned with the national average. Wireless taxes are comprised of state and local taxes, fees, and government surcharges. Nebraska’s wireless state and local rate increased in 2020 to 19.30% while the national average is 12.82%.  To remedy the transparency principle this tax violates, no municipality should be able to impose any tax or fee related to wireless and prepaid wireless services unless the tax has been approved by the voters within that municipality at a primary or general election.

For more information on the Platte Institute Legislative Issue Guide, please call (402) 452-3737 or write the Platte Institute staff here.


Occupational Licensing Reform

2019-2020 Nebraska Occupational Licensing Review

Academics agree: occupational licensing reform is important

Job Licensing: Questions You Should Ask

The 2018 Occupational Licensing Review


Nebraska’s Hidden Tax: Red Tape Regulation Harming Economic Growth

Lifting Regulations Is How Nebraska’s Economy Can Stay Alive During and After COVID-19

Nebraska is Cutting Red Tape, But Still Has Room to Improve

Nebraska REINS Act: A good government way to provide oversight of major regulations

Transparency and Good Governance

Federalism and Federal Aid Dependency

One size fits all federal policy endangers Omaha children and families

Legislative Testimony: LB611 – Require state agencies to provide a federal funding inventory

Letter to governor calls for a federal funds inventory


COVID-19 to worsen local pension debts

The Billion Dollar Problem Still Threatening Omaha

The Still Unsolved Problem Threatening Lincoln

Legislative Testimony: LB30 – Municipal Pension Reform

Local Government Transparency and Debt

Accounting for Property Taxes

Legislative Testimony for LB204: Require approval of voters for bonds under the Interlocal Cooperation Act

Legislature can help prevent local financial strain

Truth in Taxation

Legislative Testimony for LB103: Changes provisions relating to property tax requests

Legislative Testiomny for LB1212: Adopt the Property Tax Request Act

Senators hear proposal for “Truth in Taxation” law

Who really cares about property taxes?

Property Tax

The Nebraska Property Tax Incentive Act: What’s good about it, and what’s not?

Get Real About Property Taxes, 2nd edition

This Time It’s Personal: Nebraska’s Personal Property Tax

Nebraska’s Crowded Budget and Its Impact on Property Taxes

Don’t die in Nebraska: How the county inheritance tax works

Personal and Corporate Income Tax

A Twenty-First Century Tax Code for Nebraska

Removing Barriers in Nebraska Part Three: How our Taxes and Spending Compare

Sales Tax

Nebraska’s Sales Tax

Why the online sales tax was a good move for Nebraska

A Twenty-First Century Tax Code for Nebraska

Excise Tax

The economics of a cigarette tax increase

Breaking down the taxes on your Christmas drinks

Miscellaneous Taxes

Legislative testimony for LB445: Require a city of the metropolitan class to provide an annual budget report relating to use of any occupation tax levied and collected

Legislative testimony for LB550: Require voter approval of fees and taxes on wireless services and eliminate the prepaid wireless surcharge act

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