Nebraska Legislative Update

The second session of the 103rd Nebraska Legislature recently ended on April 17, 2014. With the completion of the session, the Legislature enacted several new bills and introduced many amendments to existing bills that are pertinent to the banking industry. This article provides brief summaries on several pieces of legislation that are particularly relevant.

Omnibus Banking Bill – LB 788

The original provisions of LB 788 were replaced with amendments consisting of six bills (LB 988; LB 775; LB 810; LB 815; LB 819; and LB 151). LB 788 amended several existing pieces of legislation. Set forth below are the pertinent provisions of LB 788:

• Access to Decedent’s Safe Deposit Box: LB 788 creates a process for entry into a decedent’s safe deposit box for the limited purpose of locating a Last Will and Testament, deed to a burial plot or burial instructions. Persons allowed access upon providing the bank with the requisite affidavit include (a) an heir, (b) a devisee or person nominated as a personal representative, or (c) the agent or attorney specifically authorized in writing by such and heir, devisee or personal representative. (Originally introduced as LB 988.)
• Disclosure of Confidential Information: The bill also allows banks and other corporations to release otherwise restricted confidential information regarding date of death, valuation of property and indebtedness and beneficiary designations for property in their possession. The amendment allows attorneys and certain designated parties to obtain this information via an affidavit in lieu of the requirement to obtain the appointment of a special administrator. (Originally introduced as LB 775.)
• Preemption of Local Ordinances for Real Estate Loans/Mortgages: LB 788 also prohibits local ordinances and resolutions from interfering with the enforcement or servicing of any real estate loan agreement or any mortgage, deed of trust or other security instrument by which the loan is secured. The regulation of these activities is reserved to state and federal laws. (Originally introduced as LB 810.)
• Trust Funds Awaiting Investment or Distribution: LB 788 conforms state law regarding the pledging of securities for trust funds awaiting investment or distribution with federal law. If not insured by the FDIC, a state-chartered bank shall set aside collateral as security under the control of appropriate fiduciary officers and bank employees. This does not apply to a fiduciary account in which full investment authority is retained by a person or entity other than the bank. (Originally introduced as LB 815.)
• Trust Deeds – Mortgages/Optional Future Advances: LB 788 conforms the way debts or obligations and future advances may be secured pursuant to a mortgage or trust deed covering an interest in real property. This will secure optional future advances necessary to protect the security, even though such advances cause the total indebtedness to exceed the maximum amount stated in the mortgage, unless otherwise limited by the specific terms of the mortgage or trust deed. (Originally introduced as LB 819.)
• Business Records Exception to Hearsay Rule: LB L88 creates an acquired or integrated business records exception to Nebraska’s hearsay rule. To qualify for the “exception,” a business record must meet certain criteria and otherwise be shown to be trustworthy by appropriate testimony. (Originally introduced as LB 151.)

Effective Date: July 18, 2014

Nebraska Capital Expansion Act

LB 759
LB 759 increases the maximum amount of funds that any financial institution may obtain under the Nebraska Capital Expansion Act. Prior to LB 759, banks, capital stock financial institutions, and qualifying mutual financial institutions were eligible to obtain time deposit open accounts in the amount of $1 million from funds available for investment by the State Investment Officer. LB 759 increases the maximum amount that any financial institution may receive for such deposit to $6 million. (Originally introduced as LB 713, the bill was amended into LB 759.)
Effective Date: July 18, 2014

Personal Property Tax Levies

LB 33
LB 33 allows the Tax Commissioner to contract with financial institutions in Nebraska to levy against personal property belonging to a delinquent taxpayer. This bill represents an effort by the Nebraska Department of Revenue to help simplify the existing lien process. This pilot project has not changed any rights that a taxpayer currently has with respect to contesting a tax liability or tax lien. Rather, this legislation simply allows the Department to convert the usual lien process done through the mail into an electronic lien process.

Effective Date: July 18, 2014
 

Nebraska Job Creation and Mainstreet Revitalization Act

LB 191
LB 191 creates the Nebraska Job Creation and Mainstreet Revitalization Act. The legislation provides income tax credits (20 percent for rehabilitation projects up to $5 million) for certain expenses for historic preservation activities in connection with private property listed in the National Register of Historic Places or eligible for such listing, or has been designated pursuant to a landmark ordinance approved by the State Historic Preservation officer or eligible for such designation. (Financial institutions qualify to take a credit against the bank deposit tax for qualifying expenditures.)

Effective Date: July 18, 2014

Waste Water Treatment Facilities Construction Assistance Act

LB 514
LB 514 would allow for partnerships between the State and lending institutions which disburse loans for pollution control projects through a linked deposit program. The bill authorizes low-interest loans for the construction, rehabilitation and enhancement of certain water pollution control facilities, such as onsite waste water and private septic systems, local water protection projects, including best management practices for nutrient controls, and eligible non-point source activities under the Livestock Waste Management Act. The legislation allows for the deposit of loan funds with eligible financial institutions in low-yielding deposit accounts, certificates of deposit, or other authorized deposits. The deposits are exempt from the requirements under the Public Funds Deposit Security Act.
Eligible financial institution means a bank that agrees to participate in the linked deposit program and is authorized to conduct banking in Nebraska. Eligible financial institutions receiving public funds are required to make loans for construction, rehabilitation, and enhancement of such eligible water pollution control systems at an interest rate lower than the otherwise prevailing interest rate for such activities.

Effective Date: July 18, 2014

Artisan’s Liens

LB 851
An “artisan lien” is automatically created when someone repairs and/or improves certain items of personal property such as a vehicle or farm equipment. The lienholder must file a statement with the Nebraska Secretary of State within 60 days to perfect his or her lien. LB 851 allows for the extinguishment of any  
such lien upon the sale of goods for reasonable value to satisfy the claim and upon notice mailed to the lienholder. The bill provides for the application of proceeds from such sale to satisfy the artisan’s lien.

Effective Date: July 18, 2014

State Bank and Savings and Loan “Wild-Card”

LB 712
LB 712 was introduced at the request of the Nebraska Department of Banking and Finance. It would provide for the annual re-enactment of the depository financial institutions “wild-card” provisions to provide equal rights, powers, privileges, benefits and immunities for state-chartered banks, credit unions and savings and loan associations with their respective federal counterparts. Due to certain Nebraska constitutional restrictions, these statutes are amended annually.

Effective Date: April 11, 2014

Uniform Commercial Code and Statutory Agricultural Liens

LB 750
LB 750 addresses how the Secretary of State’s office files financing statements related to statutory agricultural liens. Under current law, the only way to remove a financing statement filed between 1979 and 2003 is to file a termination statement. In order for these older liens to remain active, LB 750 requires the filing of a continuation statement with the Secretary of State after June 30, 2014, and before January 1, 2015.

Effective Date: April 11, 2014

Sales and Use Tax

LB 867
LB 867 exempts separately stated postage charges from sales and use taxes. The provisions of LB 829, were amended into LB 867, in part.

Effective Date: April 1, 2014

Tax Incentive Programs

LB 1067

LB 1067 extends the “sunset dates” for certain tax incentive laws. This legislation extends the credits under the Nebraska Advantage Act, the Nebraska Advantage Research and Development Act, and the Nebraska Advantage Micro Enterprise Tax Credit Act until December 31, 2017.
 
Effective date: Effective for all tax years beginning or deemed to begin on or after January 1, 2014

Business Innovation Act

LB 1114

LB 1114 transfers the pilot program under the Small Business Innovation Act under the umbrella of the Business Innovation Act. The legislation provides funding for a study to make recommendations on ways to support and increase venture capital in Nebraska, including an analysis of best practices in other states. The bill also extends the termination date of the Business Innovation Act to December 1, 2021.

Effective Date: July 18, 2014

Nebraska Employment Laws

LB 560

LB 560 requires employers to pay each employee on a designated regular payday and may not change such day without 30 days’ notice, On each payday, an employer is required to provide its employees with an itemized statement listing the identity of the employer, the hours for which the employee was paid, the wages earned, and deductions made from the employee’s wages. The bill also authorizes the Commissioner of the Department of Labor to subpoena records and witnesses related to the enforcement of Nebraska law.

Effective Date: July 18, 2014

Wage Payment and Collection Act

LB 765

If an employer chooses to pay wages with a payroll debit card, LB 765 provides that the employer must comply with the requirements of the federal Electronic Fund Transfer Act.
The bill also requires the employer to allow an employee at least one means of fund access withdrawal per pay period, without fees. The bill further prohibits an employer from passing on its fees or costs to the employee.

Effective Date: January 1, 2015

 
Income Taxation

LB 987

Beginning June 1, 2014, LB 987 adjusts individual income tax brackets for inflation. The bill also exempts Social Security benefits from state income taxation for taxpayers with federal adjusted gross income below certain threshold amounts (married filing jointly = $58,000; all other taxpayers = $43,000).

Effective date: Effective for taxable years beginning or deemed to begin on or after January 1, 2015