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As Thanksgiving marks the start of the holiday season, families across the nation gather to give thanks and celebrate. These end-of-year holiday gatherings give us an opportunity to reflect on the year that has passed, as well as focus on our goals and priorities for the year ahead with family and friends.
We have much to be thankful for across District 38 and throughout Nebraska. A survey of local newspapers from across the district demonstrates many of the great things happening every day in our local communities. Student success in a wide variety of school activities, including academic, co-curricular, and athletic, have great support from parents and residents. Our churches, civic organization, and local business groups are engaging citizens and responding to local needs as is the rich tradition of our rural communities.
Although this fall’s harvest encountered many challenges posed by Nebraska’s ever changing and unpredictable weather, for the most part yields were good. Current drought monitor indexes show normal moisture conditions across the district going into winter. Although commodity prices remain low, significant economic distress as has been seen in prior decades has not developed.
It is easy to fall into a pattern of only seeing the challenges that lie before us. With my focus on policy solutions, I personally do not always take the time to step back and fully recognize the successes happening every day and the opportunities before us. The upcoming holiday season provides an important reminder of the value of pausing, taking stock, and being thankful.
The coming year, as the years before it, will present a new slate of political challenges, policy choices, and opportunities to address them. As we focus in state government on addressing issues from appropriations to property taxes, the families who will be gathering to celebrate Thanksgiving and Christmas must remain at the forefront of our minds.
The values we share around the holiday dinner table should be reflected in the values we embrace in our policy. It is easy to assume government is a force unto itself. We see neighbors help each other harvest in a time of need, communities line main street to cheer the arrival of newly crowned state champion teams, and community groups hosting benefit suppers to help a family in need. We must celebrate and build upon the strengths that make our rural communities such a great place to live, work, and raise a family.
This Thanksgiving I will personally give thanks for many things. I am thankful for the opportunity to represent my home community in the Nebraska Legislature. I appreciate and value all of the conversations, letters, and calls from constituents who provide valuable feedback and information to inform my decisions. I cannot sufficiently express the full depth of my gratitude to my family, friends, and neighbors who pitch in and help with my responsibilities at home, especially around the farm, that enable me to serve.
Over the course of the coming months there will be ample time and opportunity for discussion about politics, policy, and politicians. It is my prayer that this holiday season finds all Nebraskans in the company of family and loved ones. May we all take stock of the rich blessings that are afforded us by virtue of living in strong communities that value our liberty and our freedom. Happy Thanksgiving to all.
During the last legislative session I was clear with my concerns about spending levels in our state budget. In the face of lagging revenue receipts and decreased revenue forecasts, the Appropriations Committee and Nebraska Legislature balanced the state budget by transferring $173 million from the state Cash Reserve and sweeping almost $194 million from various Cash Funds to pay for ongoing expenses.
I did not vote for those transfers or to advance that budget from committee, nor did I vote for the budget on the floor. As I stated repeatedly, the next budget cycle would require $367 million in revenue growth just to cover ongoing expenses paid for with one time transfers. That is a pretty deep hole to “grow” out of in the midst of a struggling agricultural economy. At the conclusion of the legislative session in May, a group of my fellow senators and I continued to publicly state our concerns, predicting that a sluggish farm economy and its financial impact on our communities would continue to weigh down state tax receipts.
On October 27, the Nebraska Economic Forecasting Advisory Board (NEFAB) met to update the revenue forecast for the current fiscal year and the 2018-2019 fiscal year. Tax receipts, specifically personal income and sales taxes, have not met the forecast levels in any month since the board last met in April and lowered the revenue projections. Thus, it was no surprise that the NEFAB again reduced the projection for tax receipts to the state General Fund, this time by a total of $224 million over the current budget biennium.
A deeper examination of the details behind the declining numbers presents greater concern. For the current fiscal year, FY18, the NEFAB reduced revenue by $100.4 Million. In the second year of the budget cycle, FY19, the revenue level was reduced by $123.5 million. The revenue declines in sales and income taxes are greater in the second year than the first. The economic models used by the NEFAB to project revenue indicated the need for a steeper reduction with the passage of time. There is no objective evidence to support the claim we will “grow” out of the spending hole the Legislature has created any time soon. On a positive note, corporate income tax receipts were revised upward by $50 million over the biennium.
Here is the scorecard: the budget passed last session plugs a $367 million hole with one time money. If spending restraint is not exercised to accommodate the $224 million revenue downgrade, it will need to be covered by the transfer of more one time money, primarily the Cash Reserve. The next budget cycle would begin with a $591 million gap to fund ongoing expenses.
If the entire $224 million from the current revenue decrease is taken from the Cash Reserve rather than in spending reductions, it would leave $155 million in the state’s “rainy day” fund. Current revenue models have a greater negative impact with time, and the potential exists for an ongoing revenue deficit almost 4 times the size of the Cash Reserve.
The very fact that personal income tax revenues continue to come in below economic projections indicates Nebraska families and small businesses are not earning as much as expected. Lagging sales tax revenues reflect the decreased spending by Nebraska consumers that accompanies those reduced incomes. Any strategy that increases state revenue by taking it from already strapped Nebraska taxpayers, rather than reducing state spending, is illogical.
I believe in the resilience of Nebraskans. Inherent in that belief is the faith that we can strategically set priorities and responsibly address funding needs using evidence and cost/benefit analysis. A quick recovery of Nebraska’s fiscal health depends on it.
Financial decisions for yourself and your family are a personal choice. How you spend your money is unique to your situation, depending on your priorities and values. You decide your comfort level with risk, personal savings, and future goals. If you make a poor decision, it does not impact the livelihood of your friends and neighbors. Even when we try our best to be rational, it is a natural tendency to let emotion influence our personal decisions. When the consequences are our own, that is acceptable.
Public policy decisions are very different. When legislators make decisions about spending tax dollars, making tax policy, or creating regulations, those choices impact everyone. Far too often policy decisions are “eminence based” rather than “evidence based”. The most coordinated media campaigns or most popular catch phrases become accepted as true, whether or not evidence to support the claim exists. Unfortunately, ideas can become popular and gain support even when evidence contradicts the premise.
My recent columns on tax incentives exemplify the need for good evidence to support policy decisions. The original legislation that created the Nebraska Advantage Act did not require reporting of the many metrics that would allow evaluation of the intended impact of the programs. Supporters and opponents alike make claims about the value of the Nebraska’s tax incentives. In the absence of evidence, it is not credible to say the programs are successful economic tools, just as it is not credible to say they have not been.
Despite common political strategies that use fear, anecdote, and false dichotomies to promote a particular policy, sound governance should use evidence to support decisions that impact the daily lives of Nebraskans. Many popular policies sound reasonable, yet the evidence does not support the claims made. One of the most common arguments in support of expanding Medicaid eligibility is to reduce the use of expensive emergency room services for non-emergency care. The state of Oregon used a lottery system to expand Medicaid to a randomized group of working adults. Use of Emergency Room services increased in those newly covered, versus the same population without Medicaid. Expanding Medicaid had the opposite effect on costs. Nevertheless, the claim continues in spite of the evidence.
Studies examining the long term impact of early childhood education programs have provided evidence that contradicts the popular claims. Research at Vanderbilt University examining Tennessee’s universal public early childhood program and data from Head Start have shown the impact of early childhood education programs, when applied broadly, vanishes in early elementary school. Nevertheless, data from boutique programs are used to advocate for additional investments, while ignoring the more comprehensive evidence.
Cost and benefit analysis of government programs is essential for judicious use of tax dollars. All too often it is assumed that more money spent equates to equal or greater outcomes. There is a basic economic principle that states “there is no such thing as a free lunch”. There is a cost associated with every dollar spent, including trade-offs to other programs. When making decisions to spend taxpayer money, lawmakers have a responsibility to make decisions based on data that supports their decision.
There is no evidence that supports the claim that more dollars spent on education equates to better learning outcomes. The rate of return diminishes with additional investment. Beyond a basic level of funding, there is not compelling evidence to support the claim that students perform better when more money is spent. However, education spending is frequently used as a metric to reflect educational quality.
Using evidence and data to make good policy decision does not mean they are devoid of compassion. Emotional stories and anecdotes are powerful, but they are not evidence. Public decision making is distinct from private choices. The careful balance between the individual needs and public good can be easily influenced by cognitive biases. Good data and careful standards of evidence provide the foundation for sound public policy.
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