NEBRASKA SPECIAL SESSION ENDS

On August 20, the Legislature advanced for the final time LB 34 – not without continued debate, but without tax increases. Instead, the bill would cap cities and counties and “front load” the current income tax credit, meaning it will be distributed to schools and be passed along as tax relief reflected on your property tax statement, not as an income tax credit on your tax return.

In addition to passage of LB 34, the legislature passed several changes to appropriations including around $135 million in spending cuts to pay, at least in part, for the $185 million needed to pay for the front-loaded property tax credit (without additional money those currently claiming the 1107 tax credit would go backward once its “front loaded”).

The legislature did adjourn sine die, which ended this special session.  The legislature will be back in session in January or later this year if Governor Pillen calls another special session.

We will continue to work for our industry.

Thanks to our legislative affairs team for the time, energy and expertise they used on our behalf!

-  Last Updated 9.6.2024 -

As the Nebraska Legislative special session continues, there are nearly 100 different proposals under consideration to make up for the lost revenue from Gov. Jim Pillen’s plan to cut property taxes by as much as 50 percent. On the list are several ideas that have been implemented in other states and negatively impacted consumers and local businesses alike. On the heels of weak job numbers, rising unemployment and growing fears of a recession, now is the wrong time to be injecting further uncertainty into the economy.

 

Legislators would be wise to heed these lessons and steer clear of any effort to slap a per order delivery tax on companies that provide everyday services to Nebraskans. Yet the proposal on the table (LB34)) would impose an additional $0.50 fee on top of the purchase price for anything delivered to a customer in Nebraska.

 

This would hurt customers across the 4,355 eating and drinking establishments in the state, as well as the 74,000 workers they employ.

 

Let’s unpack the impact for all groups. For customers, delivery is here to stay - and not just for convenience items, but for everyday staples. In recent years, more than half (54%) of adults used food delivery apps, including 41% for groceries. These numbers have not faded as Covid receded. Delivery now provides an essential service for Nebraskans, including residents with limited mobility or access to transportation, for household essentials and healthy foods.

 

In fact, in 2018 12.8% of Nebraskans, including 79,000 children, were food insecure, meaning they don't have enough to eat and don't know where their next meal will come from.

 

Delivery services are a lifeline for these groups. For those who may struggle with in-person shopping, delivery services increase access to essential items, especially for the nearly 12 percent of Nebraskans with disabilities who may struggle with mobility. Nearly one third (32.2%) of Nebraska’s veterans have a service connected disability rating.

 

In instituting this regressive 2% flat tax, the state will be forcing those who need delivery the most to pay a penalty–even when ordering essentials like medicine, groceries, or diapers.

 

Then, there are small and local businesses like like our restaurants.  We have already been stretched to the limit by the pandemic, inflation and higher operating costs, and don’t have the ability to absorb a new fee. We also will face an unpleasant choice of limiting our operations, raising our prices or closing down. Bottom line: for the majority of Nebraska’s 167,878 small businesses, new taxes make services more expensive for their customers or these businesses cease to exist all together.

 

Finally, a tax on delivery orders would hurt delivery workers across the state. A delivery tax will inevitably lead to cost increases for customers, which will in turn lead to fewer orders and fewer opportunities for delivery workers to earn income.

 

I get it. Slapping a fee on a mega delivery company like Amazon feels like a drop in the bucket.  But for small brick and mortar businesses, it is a different story. For the restaurant on your block or the mom and shop retailer or the person dropping groceries off at your doorstep, we already operate under thin margins. The financial assistance small businesses received from the government to weather the pandemic is long gone. Companies don’t just absorb new fees - they pass them onto their customers or they shut down because they start losing money. Billing a sales tax as an excise tax doesn’t change who ultimately pays the bill, and that’s Nebraskans.

 

When Colorado implemented a similar 27-cent delivery fee, it led to “confusion, frustration” according to local media reports. New technology for software compliance cost one entrepreneur $100,000.

No one likes paying any taxes, and lowering the amount Nebraska property owners pay each year may well be a cause worth considering. But elected officials have an obligation to be honest with their constituents about its impact. Cut off or reduce one revenue stream for services and the government needs a way to make it up elsewhere.

 

Mandating a new fee on delivery services is a regressive tax, pure and simple. It will have real and painful consequences for those already navigating choppy economic waters without a life jacket. Lawmakers should think twice before pursuing this misguided course of action.