2026 Legislative Bulletin #8

109th Legislature, Second Session February 27, 2026 - Bulletin 8

ITEMS OF INTEREST TO MUNICIPALITIES

Stories inside:

• LB 1072 (State budget bill relating to the Municipal Equalization Fund): After visiting with several Senators on the Appropriations Committee and staff at the Legislature’s Fiscal Office, there is consensus on the following: 1) first class cities will remain eligible for MEF funding; and 2) all municipalities eligible for MEF funding will have a 5-10% cut, depending on the increase in sales tax and the increase in insurance premium tax. The calculation for the amount of funds distributed to eligible municipalities will not change.

• LB 548: Legislature adopts measure to allow limited extra-territorial sales by municipally owned natural gas systems

• LB 1165 (AM2016): League joins NEDA, Chambers of Commerce and others in support of the ‘Grow the Good Life Act’

• LB 1168 and LB 1129: Two tax increment financing bills heard by the Urban Affairs Committee

• LB 839: Bill to change reporting requirements under the Municipal Density and Missing Middle Housing Act advances to second round of debate

• LB 1255: Hearing held on bill to ban the use of eminent domain by public power suppliers

• LB 1108: Bill heard to change procurement requirements for interlocal entities that generate electricity

LB 1072:

State budget bill relating to the Municipal Equalization Fund (MEF)

After visiting with several Senators on the Appropriations Committee and staff at the Legislature’s Fiscal Office, there is consensus on the following: 1) first class cities will remain eligible for MEF funding; and 2) all municipalities eligible for MEF funding will have a 5-10% cut, depending on the increase in sales tax and the increase in insurance premium tax. The calculation for the amount of funds distributed to eligible municipalities will not change.

Background:

Although the recommendation and narrative in the Governor’s Budget Book stated that cities of the first class would not be eligible for MEF funding, LB 1072 (as originally introduced) did not include provisions excluding cities of the first class from eligibility. Page 110 of LB 1072 would amend section 77-27,144 to provide that the 3% collection fee of local option sales tax funding MEF would be reduced to 1.5% of the collection fee credited to the MEF and “1.95% to the Department of Revenue Enforcement Fund.” The League was informed that the 1.5% should have been 1.05% allocated to fund MEF with “1.95% to the Department of Revenue Enforcement Fund.” According to the Legislature’s Fiscal

LB 548: Legislature adopts measure to allow limited extraterritorial sales by municipally owned natural gas systems

OnFeb. 27, on a vote of 47 - 1. the Legislature adopted LB 548, introduced by Sen. Loren Lippincott of Central City. LB 548 will allow Cities and Villages that own and operate natural gas distribution systems to sell discounted gas contracts to some limited very large natural gas customers outside of the normal natural gas territory of the city or village before Jan. 1, 2027. 

2026

LEGISLATIVE SESSION

Office, this would cause a reduction of MEF funds by $14,385,000 in FY 26-27; $14,672,000 in FY 2728; and $14,966,000 in FY 28-29. In FY 24-25, $34,034,709.01 was distributed to municipalities eligible for MEF. Based on projections, there will be an increasing amount of sales tax and insurance premium tax resulting in a 5-10% cut for all municipalities eligible to receive MEF.

LB 1165 (AM2016): League joins NEDA, Chambers of Commerce and others in support of the

‘Grow

the Good Life Act’

Elkhorn Sen. Brad von Gillern, Chair of the Revenue Committee, introduced LB 1165 on behalf of the Governor to adopt the “Grow the Good Life Act.” He selected LB 1165 as his personal priority bill to incentivize large in-state employers to retain their in-state workforce as well as attract or relocate employees to Nebraska’s workforce when there is a material change in ownership or control pursuant to a merger or business combination with a company located outside of Nebraska.

The bill does not mention Union Pacific Railroad by name; however, many of the key provisions of LB 1165 (AM2016) are intended to keep Union Pacific Railroad’s corporate office in Omaha as it considers a major merger with Georgia-based Norfolk Southern Railroad.

The “Grow the Good Life Act” is a “pay-for-performance” initiative promising over a $1 billion return on Nebraska’s $50 million investment.

Continued on page 5 / See LB 1165

League of Nebraska Municipalities LEGISLATIVE

LB 1168 and LB 1129: Two tax increment financing bills heard by the Urban Affairs Committee

OnFeb. 24, the Urban Affairs Committee heard two bills relating to the Community Development Law, otherwise known as the tax increment financing laws (TIF).

LB1168 , introduced by Sen. Dave Wordekemper of Fremont, amends the Community Development Law to authorize a community redevelopment authory to issue conduit revenue bonds on behalf of a private investor under which the authority’s liability for repayment is limited to the ad valorem taxes generated by the project area. The bill also allows authorities to enter into taxpayer agreements with owners of land in the project area. Hageman Capital Group and a League representativ e testified in favor of the bill. No one testified against the bill at the public hearing.

2025 LEGISLATIVE SESSION 2026

LB 1129 , introduced by Sen. Rob Dover of Norfolk, provides additional tools for municipalities in their development toolkit. The bill expands TIF eligibility to include underdeveloped parcels that have been in extraterritorial zoning jurisdictions for over 25 years. LB 1129 adjusts to the criteria for “extremely blighted” areas by lowering the unemployment and poverty thresholds and allows municipalities to use alternative data when federal data is unreliable or lacking for the area under consideration.

In addition to the League, the City of Norfolk , the Nebraska Housing Developers Association and a lawyer with statewide experience in TIF projects testified in favor of LB 1129. It was reported that there was one letter in opposition to the bill but there were no testifiers at the hearing who opposed the bill. There were five letters in support of the bill. 

LB 839: Bill to change reporting requirements under the Municipal Density and Missing Middle Housing Act advances to second round of debate

Under the Municipal Density and Missing Middle Housing Act, Lincoln, Omaha, and cities of the first class with a population over 20,000 inhabitants are required to electronically submit a report to the Urban Affairs Committee of the Legislature detailing their efforts to address the availability of and incentives for affordable housing through their zoning codes, ordinances, and regulations.

LB 839, introduced by Bellevue Sen. Victor Rountree, requires cities to include additional information in these reports regarding the number of housing units designed and constructed with accessibility requirements according to the federal Fair Housing Act. With

the committee amendment recommended by the League and other municipalities, the bill requires cities to report the number of multifamily housing units constructed with accessibility requirements since January 1, 2021. Previously, the bill required information dating back to March 13, 1991.

After the committee amendment was adopted, the bill advanced to Select File, the second round of debate, on a vote of 29-1.

Thanks to Sen. Rountree and the Urban Affairs Committee for working with the League on the committee amendment. 

League of Nebraska Municipalities LEGISLATIVE BULLETIN

LB 1255: Hearing held on bill to ban the use of eminent domain by public power suppliers

OnFeb. 26, the Legislature’s Judiciary Committee took testimony on LB 1255, introduced by Sen. Eliot Bostar from Lincoln. LB 1255 would prohibit public power suppliers, including municipalities, from exercising any powers of eminent domain.

Extensive opposition testimony was provided by the legal counsels from the Nebraska Public Power District and the Omaha Public Power District on behalf of all public power suppliers. The testifiers emphasized that eminent domain is a rarely used but essential tool contemplated as far back as the founding fathers. 

LEGISLATIVE SESSION 2026

LB 1108: Bill heard to change procurement requirements for interlocal entities that generate electricity

OnFeb. 22, the Legislature’s Government, Military, and Veterans Affairs Committee heard testimony on LB 1108, introduced by Sen. Stan Clouse of Kearney.

LB 1108 would accomplish three things that modernize public bidding laws for entities formed under the Interlocal Cooperation Act that generate electricity as well as public power districts.

There is a current procurement statute that ONLY applies to joint entities formed under the Interlocal Cooperation Act that generate electricity. The ONLY entity formed in that manner appears to be a joint entity formed under the Interlocal Cooperation Act comprised of the City of Hastings, the City of Grand Island, the City of Nebraska City, the Municipal Energy Agency of Nebraska and a rural electric cooperative in South Dakota. This joint public entity owns the Whelan II electric generation facility in Hastings.

LB 1108 would amend Neb. Rev. Stat. 13-824.01 to raise the public bid threshold for this joint public entity. The current bid threshold for this type

of entity is $100,000. This bill would change the bid threshold to mirror the bidding thresholds in Neb. Rev. Stat. 70-637 for public power districts of $750,000 or $1,000,000 depending on the size of the district.

LB 1108 would also amend the procurement law for the joint public entity to lower the number of times that joint public entities that generate electricity must publish bid notices in a legal newspaper. Currently, this type of entity must publish bid notices three times. LB 1108 will lower this requirement to one publication in a legal newspaper. Nebraska municipal bidding law typically requires only one such publication. This bill would make Neb. Rev. Stat. 13-824.01 consistent with other municipal bidding laws. Three publications takes time and often a much-needed part might cease to become available in the time that it takes to make three publications.

LB 1108 would also amend Neb. Rev. Stat. 70-637 which is the procurement statute for public power districts to lower the number of times public power districts must publish bid notices in a legal newspaper. Current law requires

that public power districts publish bid notices in a legal newspaper three times. LB 1108 would similarly lower this requirement to only one such publication. In addition to testimony by a representative from the League, detailed testimony on the potential favorable impacts that would be provided by LB 1108 was provided by Shane Stone, City of Hastings Director of Administration; Keith Leonhardt, City of Hastings Director of Utilities Capital Management; and Randi Scott, Omaha Public Power District Government Affairs Specialist. 

League of Nebraska Municipalities LEGISLATIVE

LB 1165

Continued from page 2

The employer is required to meet performance criteria outlined in AM2016; failure to meet the performance standards will result in a recapture of past credits with penalties and interest as well as disallowance of any future credits to the company.

The Revenue Committee held a hearing on LB 1165 on Feb. 25. Sen. von Gillern and proponents emphasized that LB 1165 with AM2016 also would benefit municipalities across the state. In addition to a League representative, Jeff Hofaker testified in strong support of the bill (AM2016) on behalf of the Phelps County Development Corporation and the Nebraska Economic Developers Association. Representatives from the City of Omaha, Greater Omaha Chamber, Nebraska Chamber of Commerce & Industry, and others testified in support of the bill. The United Cities of Sarpy County sent a letter of support. There was no testimony in opposition or in a neutral capacity.

Click here for Sen. von Gillern’s handout to members of the Revenue Committee summarizing AM2016 and identifying the following three initiatives to assist qualifying municipalities in Nebraska: 1. Enhances existing ImagiNE Nebraska Act to

provide enhanced benefits for all job creation projects across Nebraska that meet certain employment and investment requirements:

• Increases percentages of wage and investment credits in three existing tiers (Quality Jobs, Rural Manufacturing and Urban Manufacturing)

• Adds a 1% bonus credit to jobs in Nebraska filled by new-to-Nebraska residents –requires 500 new employees earning an average of $100,000 annually

2. Expands eligibility for Site and Building Development Fund grants to include capital improvement to facilitate employer retention in the event of a change in ownership or control:

• Transfers $5M general fund dollars to support needed capital improvements at a qualified HQ company

3. Creates a new grant program administered by Nebraska Department of Labor:

• Allows for a grant of up to $300K to help facilitate a retention and relocation plan in the years following a change in ownership or control of a major employer headquartered in Nebraska. 

NEBRASKA UNICAMERAL LEGISLATURE 109th LEGISLATURE, SECOND SESSION SCHEDULE OF COMMITTEE HEARINGS

The order of the bills listed may not be the order in which they are heard that day in committee.

Thursday, March 5, 2026

Judiciary Room 1524 - 12:00 p.m.

AM2313 Bostar Amending LB1096

Monday, March 9, 2026

Nebraska Retirement Systems Room 1525 - 12:00 p.m.

Appointment

Wheelock, Horacio J - Public Employees Retirement Board

*Presentation of the Omaha School Employees Retirement System Experience Study to the Retirement Committee pursuant to section 84-1503 (4) (a) *Invited testimony only