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Since the beginning of the legislative session, I have been contacted by constituents who are in favor of Governor Heineman’s tax-cut proposal and by those who are in favor of fully-funding our local school districts. As a fiscal conservative I am in complete support of letting taxpayers keep more of their hard-earned dollars, but I am also a very strong believer in a quality education system. Unfortunately, from the looks of a preliminary proposal released by the Legislature’s Appropriations Committee, our wish list will have to be trimmed.
The $7.2 billion budget includes funding for important state obligations such as child welfare reform, capitol construction, and services for the developmentally disabled. The 2011-2013 budget’s biggest expenditure is state aid to schools, but it is considerably less than anticipated and the recommendation leaves only $17.6 million available for a number of other proposals, including the Governor’s tax reduction plan. Despite recent improvements in the economy, it is projected that the state will be facing a $461 million shortfall for the 2013-2015 budget.
In crafting the two-year budget last year, the state aid formula provided for $880 million in aid going to Nebraska school districts. However, more recent projections for the 2012-13 school year have lowered that number, due in part to higher property valuations, and the Appropriations Committee has recommended providing only $837 million. In addition, next year will be the first time in four years that the school districts will not be receiving assistance from federal funds.
Recognizing the competing needs for state funds, the Governor has offered to trim his tax-cut package by almost a third. As originally proposed, the plan would expand the tax brackets, lower individual income tax rates, lower the corporate tax rates to assist small businesses and eliminate the inheritance tax. It was estimated to cost $317 million over the next three years. Under the most recent proposal, the inheritance tax and the corporate income tax rate would not change, but low-and middle-income taxpayers would still realize some tax relief.
The Legislature will be discussing the Appropriations Committee’s recommendation in the coming weeks and adjustments may certainly be made; however, I praise the committee for taking the fist steps in the daunting task of holding the line on spending while adequately funding the state’s many needs.