Revenue Committee
February 7, 2025
Committee Chair: Sen. Brad von Gillern | Bills Heard: 2 | Full Transcript (PDF)
LB389: Eliminate Educational Service Unit property tax levy and replace with state funding
Introduced by: Sen. Dave Murman | Testimony: 1 proponents, 41 opponents, 0 neutral | Read bill text (PDF)
Sen. Murman's bill to shift ESU funding from property taxes to state coffers faces overwhelming opposition from educators and school leaders. LB389 would eliminate the 1.5-cent property tax levy for Educational Service Units effective fiscal year 2028-29, replacing it with state appropriations guaranteed to increase 3.5% annually. The bill is modeled on successful 2023 legislation that eliminated community college property taxes.
Why it matters: ESUs provide critical services—mental health counseling, special education, technology support, professional development—that rural and small districts cannot afford independently. Shifting to state funding threatens these services if the state fails to deliver, as it has historically.
What they're saying: - Proponents: The Platte Institute argued LB389 directly attacks Nebraska's high property tax burden (45th nationally). ESU funding can be replaced for only 20% of the cost of community college replacement—roughly $65 million annually by FY '31. - Opponents: ESU leaders presented damning historical data: state core service funding to ESUs is 14.5% lower in FY '24-25 than in FY '09-10, despite statutory 2% annual increase requirements. Only 2 of 15 years saw promised increases. Students and parents testified that programs like ESU 5's Wellness 4ALL mental health initiative—serving over 1,000 students—would be jeopardized. Rural school leaders warned that funding cuts would force costs back onto local property taxes.
By the numbers: 41 opponents testified versus 1 proponent. ESU 9 would face roughly $1.8 million cash flow shortfall during the 18-month tax collection lag. ESU 19 would have lost over $3 million in revenue over the past decade under this model.
What's next: No vote was taken. Sen. von Gillern suggested using the community college bill as a template and asked about adding a backstop provision allowing ESUs to restore levy authority if state funding fails. Sen. Murman said he's open to working with ESUs and schools to address concerns.
Committee sentiment: Supportive: Sen. von Gillern Skeptical: Sen. Dungan Unclear: Sen. Sorrentino, Sen. Ibach
Sentiment estimated from questions and comments — not stated positions.
LB709: Nebraska adoption tax credit
Introduced by: Sen. Eliot Bostar | Testimony: 4 proponents, 0 opponents, 0 neutral | Read bill text (PDF)
Sen. Bostar's adoption tax credit sails through committee with unanimous support and no opposition testimony. LB709 creates a refundable state income tax credit equal to 10% of the federal adoption tax credit, providing up to $1,681 per adopted child for qualifying expenses like legal fees, court costs, and travel.
Why it matters: Adoption costs $30,000-$50,000 domestically and $75,000+ internationally. The federal credit provides little help to families earning under $30,000 annually. Since 61% of adoptions involve low- and middle-income families, a refundable state credit fills a critical gap. Each adoption offsets $65,000-$127,000 in government spending on foster care.
What they're saying: - Proponents: Lutheran Family Services CEO Chris Tonniges, an adoptive father of three, testified that infant adoption costs through his agency jumped from $15,000 to $23,000, and the agency loses $50,000 annually offering services. John Chapo, a CASA volunteer and adoptive parent, called the credit a potential 'game changer.' Nate Grasz of the Nebraska Family Alliance said it removes 'financial barriers to adoption' and encourages women to 'choose life.' - No opponents testified.
By the numbers: Bostar's math: the bill pays for itself if only 1 in 60 adoptions is influenced by the credit—a 1.6% efficacy rate. Committee members estimated roughly 135-136 eligible children annually out of 600-700 total adoptions, accounting for income thresholds. Fiscal note is small due to limited eligible population.
What's next: No vote was taken. Four proponents testified; zero opponents. The bill appears positioned for advancement.
Committee sentiment: Supportive: Sen. Dungan, Sen. Sorrentino, Sen. von Gillern Unclear: Sen. Murman
Sentiment estimated from questions and comments — not stated positions.
Session Notes
Committee Chair von Gillern opened with procedural instructions regarding testifier sheets, time limits (3-minute green light system), and written position statement deadlines (8 a.m. day of hearing via nebraskalegislature.gov). Committee members present: Sen. Tony Sorrentino (LD 39), Sen. Dave Murman (LD 38), Sen. Teresa Ibach (LD 44). Legal counsel: Sovida Tran and Charles Hamilton. Committee clerk: Linda Schmidt. Pages: Lauren Nittler (UNL, ag econ) and Jessica Vihstadt (UNL, political science/criminal justice). The hearing was held in a new room with lighting issues noted by Sen. Bostar. LB389 hearing lasted approximately 2.5 hours with 42 total testifiers (1 proponent, 41 opponents, 0 neutral). LB709 hearing was brief with 4 proponents, 0 opponents, 0 neutral. No votes were taken on either bill.
Generated by NE Wire Service | Source: Nebraska Legislature Transcribers Office This is an AI-generated summary. Verify all claims against the official transcript.