PREPARED BY: John Wiemer
LB 389 DATE PREPARED: February 05, 2025
PHONE: 402-471-0051
Revision: 00
FISCAL NOTE
LEGISLATIVE FISCAL ANALYST ESTIMATE
ESTIMATE OF FISCAL IMPACT – STATE AGENCIES (See narrative for political subdivision estimates)
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS
Any Fiscal Notes received from state agencies and political subdivisions are attached following the Legislative Fiscal Analyst Estimate.
Under LB 389, for each fiscal year t hrough FY28, any educational service unit (ESU) authorized to levy a property tax pursuant to
section 79-1225 may levy a maximum levy of 1.5 cents per $100 of taxable valuation of property subject to the levy. For FY29 and each
fiscal year thereafter, no ESU shall have the power to levy property taxes.
The bill adds that for 2029, the amount to be distributed to each ESU shall be equal to the am ount of property taxes levied by such ESU
for tax year 2027, increased by 3.5%.
For 2030 and each year thereafter, the amount to be distributed to each ESU shall be equal to the amount distributed to such ESU in
the prior year, increased by 3.5%.
The Department of Revenue (DOR) shall annually determine the amount to be distributed to each ESU and shall certify such amounts
to the State Treasurer and to the ESU. The distributions to the ESU shall occur in two equal payments, the first on or before March 31
and the second on or before August 31.
The DOR estimates the following incr ease to General Fund expenditures as a result of the bill:
• FY29: $30,662,000
• FY30: $62,397,000
• FY31: $64,580,000
The DOR estimates minimal costs as a result of the bill.
There is no basis to disagree with these estimates.
The Nebraska Association of County Officials and Lancaster County estimate county revenue losses from no longer collecting a
commission of 1% of the taxes levied by ESUs.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: State Treasurer
REVIEWED BY: Kimberly Burns DATE: 02/03/2025 PHONE: (402) 471-4171
COMMENTS: Concur with the State Treasurer’s assessment of no fiscal impact from LB 389.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: Nebraska Department of Education
REVIEWED BY: Kimberly Burns DATE: 02/03/2025 PHONE: (402) 471-4171
COMMENTS: Concur with Nebraska Department of Education’s assessment of no fiscal impact from LB 389.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: Department of Revenue
REVIEWED BY: Kimberly Burns DATE: 02/05/2025 PHONE: (402) 471-4171
COMMENTS: The Department of Revenue’s assessment of no fiscal impact in the upcoming biennium and estimate of
fiscal impact to the State beginning in 2028-29 from LB 389 appear reasonable.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: Nebraska Association of County Officials (NACO)
REVIEWED BY: Kimberly Burns DATE : 02/03/2025 PHONE: (402) 471-4171
COMMENTS: Agree with the Nebraska Association of County Officials’ estimate of no fiscal impact in the 2025-27
biennium. No basis to disagree with NACO’s assessment of potential impact to counties once the bill provisions are
enacted.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: Educational Service Unit Coordinating Council
REVIEWED BY: Kimberly Burns DATE: 02/04/2025 PHONE: (402) 471-4171
COMMENTS: The Educational Service Unit Coordinating Council’s assessment of no fiscal impact in the upcoming
biennium and estimate of future fiscal impact from LB 389 appear reasonable.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISION: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: Lancaster County
REVIEWED BY: Kimberly Burns D ATE: 02/03/2025 PHONE: (402) 471-4171
COMMENTS: No basis to disagree with Lancaster County’s assessment of potential impact from LB 389 once the bill
provisions are enacted.
ADMINISTRATIVE SERVICES STATE BUDGET DIVISI ON: REVIEW OF AGENCY & POLT. SUB. RESPONSE
LB: 389 AM: AGENCY/POLT. SUB: Lancaster County Treasurer
REVIEWED BY: Kimberly Burns DATE: 01/29/2025 PHONE: (402) 471-4171
COMMENTS: Agree with the Lancaster County Treasurer’s estimate of no fiscal impact for the county from LB 389 in the
upcoming 2025-27 biennium.
Please complete ALL (5) blanks in the first three lines. 2025
LB
(1) 389 FISCAL NOTE
State Agency OR Political Subdivision Name:
(2)
Nebraska Department of Education
Prepared by:
(3) Bryce Wilson Date Prepared:
(4)
1/24/25 Phone:
(5)
402-471-4320
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS
Explanation of Estimate:
LB 389 eliminates Educational Service Units (ESU)taxing authority for fisc al years 2028/29 and years thereafter and
replaces th e property tax revenue with State funding.
This bill would shift all funding for ESU’s to the State with the addition of a State aid based on the ESU’s 2027 tax
request plus a 3.5% increase each year. The new funding would be in addition to the Core Service funds currently
received by ESU’s.
The additional funding would be calculated and paid by the Nebraska Department of Revenue.
If the 2022/23 ESU tax receipts are grown by 3.5% per year through year 2027 th e funding needed for the first year
in 2028/20 would be roughly $47. 5 million. No fiscal cost to NDE.
_____________________________________________________________________________________________________ _
BREAKDOWN BY MAJOR OBJECTS OF EXPENDITURE
Personal Services:
POSITION TITLE
NUMBER OF POSITIONS
25-26 26-27
2025-26
EXPENDITURES
2026-27
EXPENDITURES
Benefits………………………………...……
Operating…………………………...……….
Travel………………………………………..
Capital outlay…………………...…………..
Aid…………………………………………...
Capital improvements……………………. ..
TOTAL……………………………… .....
Please complete ALL (5) blanks in the first three lines. 2025
LB
(1) 389 FISCAL NOTE
State Agency OR Political Subdivision Name:
(2)
Educational Service Unit Coordinating Council
Prepared by:
(3) Larianne Polk Date Prepared:
(4)
1/28/2025 Phone:
(5)
402-597-4843
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS 0 0
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS 0 0
Explanation of Estimate:
There is no fiscal impact for 2025-26 and 2026-27 for the State of Nebraska as the ESUs will continue to have
levy authority during those years. The following estimates are based on calculations from the 2025 property
valuations. There is no predictable formula to accurately estimate how the valuations will change from year to
year. The changes in valuation is a factor that is not accounted for in the figures.
Property taxes generated in 2025 are approximately $52,000,000 for ESUs to provide essential services to
school districts. Average increase in property taxes for ESUs is 4%. Given this number, the increase predicted
for ESUs in years 2025- 2026, 2026- 2027, and 2027- 2028 are illustrated in the table below. Fiscal years ending
2029 would have the state providing a 3.5% increase from the 2027 figure. The State obligation in 2030, and
each year thereafter, would be 3.5% increase from the year immediately preceding as illustrated in the table
below.
_____________________________________________________________________________________________________ _
BREAKDOWN BY MAJOR OBJECTS OF EXPENDITURE
Personal Services:
POSITION TITLE NUMBER OF POSITIONS
25-26 26-27
2025-26
EXPENDITURES
2026-27
EXPENDITURES
Benefits………………………………...…… Operating…………………………...……….
Travel………………………………………..
Capital outlay…………………...…………..
Aid…………………………………………...
Capital improvements……………………...
TOTAL……………………………….....
Please complete ALL (5) blanks in the first three lines. 2025
LB
(1) 389 FISCAL NOTE
State Agency OR Political Subdivision Name:
(2)
Lancaster County Treasurer
Prepared by:
(3) Rachel Garver Date Prepared:
(4)
Jan. 22, 2025 Phone:
(5)
402-441-7425
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
0 0
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS
0 0
Explanation of Estimate:
No impact to Lancaster until after fiscal year 2027 -28.
_____________________________________________________________________________________________________ _
BREAKDOWN BY MAJOR OBJECTS OF EXPENDITURE
Personal Services:
POSITION TITLE
NUMBER OF POSITIONS
25-26 26-27
2025-26
EXPENDITURES
2026-27
EXPENDITURES
Benefits………………………………...……
Operating…………………………...……….
Travel………………………………………..
Capital outlay…………………...…………..
Aid…………………………………………...
Capital improvements……………………...
TOTAL……………………………… .....
Please complete ALL (5) blanks in the first three lines. 2025
LB
(1) 389 FISCAL NOTE
State Agency OR Political Subdivision Name:
(2)
Lancaster County
Prepared by:
(3) Dennis Meyer Date Prepared:
(4)
1/27/2025 Phone:
(5)
402-441-6869
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS
Explanation of Estimate:
LB389 proposes transitioning the financial support for Educational Service Units (ESUs) from property tax levies to
direct state funding, incorporating a structured annual increase. Currently, Lancaster County retains a 1% administrative
fee from the property taxes it collects and manages on behalf of ESUs. Given the county's assessed valuation of
$42,905,047,000 and an ESU levy rate of .015% , the total ESU tax collected amounts to approximately $6,435,757 .
Consequently, the 1% administrative fee retained by Lancaster County is approximately $64,357. With the
implementation of LB389, this administrative fee would be eliminated, resulting in a direct financial impact on the
county's revenue.
_____________________________________________________________________________________________________ _
BREAKDOWN BY MAJOR OBJECTS OF EXPENDITURE
Personal Services:
POSITION TITLE
NUMBER OF POSITIONS
25-26 26-27
2025-26
EXPENDITURES
2026-27
EXPENDITURES
Benefits………………………………...……
Operating…………………………...……… .
Travel………………………………………..
Capital outlay…………………...…………..
Aid…………………………………………...
Capital improvements……………………...
TOTAL……………………………… .....
LB 389 Fiscal Note 2025
State Agency Estimate
State Agency Name: Department of Revenue Date Due LFO:
Approved by: James R. Kamm Date Prepared: 02/04/2025 Phone: 471-5896
FY 2025-2026 FY 2026-2027 FY 2027-2028
Expenditures Revenue Expenditures Revenue Expenditures Revenue
General Funds $ 0 $ 0 $ 0
Cash Funds
Federal Funds
Other Funds
Total Funds $ 0 $ 0 $ 0
Major Objects of Expenditure
25-26 26-27 27-28 25-26 26-27 27-28
Class Code Classification Title FTE FTE FTE Expenditures Expenditures Expenditures
Benefits………………………………………………………………………………………………………….
Operating Costs………………………………………………………………………………………………….
Travel……………………………………………………………………………………………………………
Capital Outlay…………………………………………………………………………………………………...
Capital Improvements…………………………………………………………………………………………...
Total…………………………………………………………………………………………………………….
LB 389 would remove the levy authority of Education Service Units (ESUs) for fiscal year 2028-29 and each
fiscal year thereafter. LB 389 adds a new section providing that ESUs which lose their levy authority will, in
2029, be reimbursed by the state in an amount equal to the amount of property taxes levied by such unit for tax
year 2027, increased by three and one-half percent. In 2030 and each year thereafter, the amount distributed will
equal the amount distributed to the ESU in the prior year increased by three- and one-half percent.
LB 389 requires the Department of Revenue annually determine the amount to be distributed to each ESU and
certify such amounts to the State Treasurer and the ESU, with distributions occurring in two equal payments on
or before March 31 and August 31.
It is estimated that LB 389 will have the following impact to the General Fund expenditures :
Fiscal Year
General Fund
expenditures
FY 2027-28 $ -
FY 2028-29 $ 30,662,000
FY 2029-30 $ 62,397,000
FY 2030-31 $ 64,580,000
It is estimated that there will be minimal costs to the Department of Revenue to implement this bill.
The operative date for this bill is three months after the adjournment of the legislature. Please complete ALL (5) blanks in the first three lines. 2025
LB
(1) 389 FISCAL NOTE
State Agency OR Political Subdivision Name:
(2)
State Treasurer
Prepared by:
(3) Jason Walters Date Prepared:
(4)
January 27, 2025 Phone:
(5)
402-471-2793
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS
Explanation of Estimate:
The State Treasurer’s Office doesn’t expect any fiscal impact from LB 3 89 to the office.
_____________________________________________________________________________________________________ _
BREAKDOWN BY MAJOR OBJECTS OF EXPENDITURE
Personal Services:
POSITION TITLE
NUMBER OF POSITIONS
25-26 26-27
2025-26
EXPENDITURES
2026-27
EXPENDITURES
Benefits………………………… ……...……
Operating…………………………...……….
Travel………………………………………..
Capital outlay…………………...…………..
Aid…………………………………………...
Capital improvements……………………...
TOTAL……………………………… .....
Please complete ALL (5) blanks in the first three lines. 2025
LB
(1) 389 FISCAL NOTE
State Agency OR Political Subdivision Name:
(2)
Nebraska Association of County Officials
Prepared by:
(3) Elaine Menzel Date Prepared:
(4)
1/24 /2025 Phone:
(5)
402.434.5660
ESTIMATE PROVIDED BY STATE AGENCY OR POLITICAL SUBDIVISION
FY 2025-26 FY 2026-27
EXPENDITURES REVENUE EXPENDITURES REVENUE
GENERAL FUNDS
CASH FUNDS
FEDERAL FUNDS
OTHER FUNDS
TOTAL FUNDS
Explanation of Estimate:
LB389 would eliminate the levy authority for ESUs.
In 2024, the ESUs levied approximately $50.9 million in taxes. Counties collect a commission of 1% of taxes
levied by ESUs. If this bill had been in place during the 2024 tax year, counties would have had a loss of
$509,000.
_____________________________________________________________________________________________________ _
BREAKDOWN BY MAJOR OBJECTS OF EXPENDITURE
Personal Services:
POSITION TITLE
NUMBER OF POSITIONS
25-26 26-27
2025-26
EXPENDITURES
2026-27
EXPENDITURES
Benefits………………………………...……
Operating…………………………...……….
Travel………………………………………..
Capital outlay…………………...…………..
Aid…………………………………………...
Capital improvements……………………...
TOTAL……………………………… .....