2017 marks the beginning of a new biennium in the Nebraska budget process. Every odd-numbered year the Nebraska Legislature develops and adopts a two year budget. Adjustments to the two year budget, called deficit appropriations, happen in the opposite year to address additional budget issues that arise unexpectedly. The state fiscal year runs from July 1 through June 30. Thus, dollars currently being spent were originally appropriated in the 2015 session for expenditure during the 2016-2017 fiscal year, which will end this June.
The budget process begins with the introduction of a budget proposal by the Governor. The Legislature’s Appropriations Committee, made up of 9 members representing each of the three congressional districts, reviews each component of the budget proposal line-by-line. The committee develops a preliminary recommendation, which forms the basis for public hearings held to obtain input from agencies, voters, and taxpayers. Following public hearings, the Appropriations Committee again works through the budget. Adjustments are made based on new information obtained from the public before advancing a final budget proposal to the floor for debate by the full Legislature. Following passage of the budget, the Governor does have the authority to exercise a line-item-veto of any single appropriation.
The amount of money used to develop the General Fund portion of the budget is based on projections of the Nebraska Economic Forecasting Advisory Board. These estimates are certified as a “Revenue Forecast”, based on the anticipated amount of sales tax and income taxes that will be paid in the future. It is important for voters to recognize these are calculations based on a number of economic assumptions, which try to predict your spending habits and income levels 24 months in advance in an attempt to estimate how much tax revenue may come into the state.
Over the past 7 months the actual receipts of tax revenue has been lower than projected. Thus, the assumptions around which the last state budget was developed did not prove to be correct. The “shortfall” represents this disparity between the expected revenue from taxes and the dollars appropriated. The Nebraska Constitution does not allow the state of Nebraska to spend money it does not have. Thus, adjustments must be made to the previously passed budget.
On the 17th and 18th of January the Appropriations Committee will hold public hearings on the proposed changes to the current fiscal year budget in response to the decreased revenue receipts. The budget adjustments include a combination of spending reductions, transfers into the General Fund from other funds including the Cash Reserve, and lapsing of unspent appropriations from last fiscal year.
Before work can begin on the next biennial budget, the current year adjustments must be passed by the Legislature. The typical process for the evaluation and development of the preliminary budget for 2017-2019 will be delayed during the process of revising the existing budget.
The Nebraska Economic Forecasting Advisory Board will meet again in February and April. That board has the ability to make adjustments to the certified revenue forecast based on economic data they have at that time. Those projections will need to be accommodated if they arise. As state revenues remain fluid, the budget writing process will need to be responsive to those conditions as well. Nebraska has a proud tradition of passing a balanced budget consistently on time, an accomplishment not achieved by many states. With diligent work, we will maintain that successful history.
On January 4, 2017 the first session of the 105th Nebraska Legislature came to order. Seventeen new senators took the oath of office and new Speaker of the Legislature and chairs of standing committees were elected as the legislature organized itself. During the process I was elected as the Vice Chairman of the Executive Board of the Legislature.
I also serve as a representative of the Third Congressional District on the Committee on Committees. This committee has the responsibility to determine the assignments of all senators to their respective standing committees. In addition to my new role on the Executive Board, I will continue to serve as a member of the Appropriations Committee. I will also be serving as a member of the Rules Committee of the Legislature, as well as a member of the Referencing Committee.
On the opening day I did express to the Legislature my belief in the importance of upholding Article 3, Section 11 of the Nebraska Constitution, which requires all votes by voice and the public disclosure of official votes. My motion to record the vote publicly was found in order by the presiding officer, Lieutenant Governor Mike Foley, who was acting in his constitutional responsibility as President of the Legislature. A motion to overrule the chair passed by a vote of 29 to 19, denying my request as a state senator for a publicly recorded vote.
In addition to the organization of the Legislature and the introduction of new bills, members of the Appropriations Committee have been briefed on the Governor’s proposed budget recommendations to address the lower than projected state revenues.The Appropriations Committee will take up the recommendations and began official discussion next week.
The proposal strategically meets the constitutional requirement to balance the budget. The predicted shortfall of $267 million would be addressed through a combination reductions in reappropriated funds from the previous fiscal year, across the board reductions of $42 million, and targeted reductions of $51 million. Transfers from the “Rainy Day Fund” and accrued balances in several specific Cash Funds will fill in another $113 million of the gap. Finally, projected remittance of sales taxes collected under agreement with Amazon.com will balance the budget.
In the process, state aid to K-12 education will not see any reductions. Corrections and many essential programs in health and human services are also held harmless, with additional investments made in areas of top priority. In total, over 70% of the budget has been prioritized as exempt from the across-the-board cuts.
Although these recommendations serve as the basis for consideration and are subject to changes, a clear plan for responsibly addressing the balanced budget has been presented. Over the next several weeks the discussion and deliberation will finalize a recommendation to advance to the floor for debate by the full Legislature.
With my election to the Vice-Chair of the Executive Board I have moved office locations in the Capitol Building. I am now located in room 2000, on the second floor on the north side of the building. Feel free to stop by or contact my office with any concerns.
The first session of the 105th Nebraska Legislature convenes on January 4, 2017. Seventeen new senators will take the oath of office, bringing new perspectives and the opportunity for innovative approaches to many issues. A new Speaker of the Legislature will be elected, and most of the standing committees will have new chairs. Although many faces will be new, most of the issues to be debated by the Legislature in 2017 are familiar to residents in District 38.
The first session of a biennium is typically dominated by the development and adoption of a two-year state budget. This year the budget process will have even greater significance, as a deficit appropriations bill must be passed to address the lower than projected state revenue before work can begin on the biennial budget. Adjustments made to current spending to meet Nebraska’s constitutional balanced budget requirement will likely carry forward into the 2017-2019 budget.
Prioritization of essential state services and careful attention to the efficiency of state spending will be my focus in the budget process. Investment in fiscally starved programs such as Corrections must come first to protect public safety, followed by funding discretionary programs. Protection of the Property Tax Credit Fund is also critical until structural property tax reform is passed. Nebraska’s Cash Reserve, known as the “rainy day fund”, will likely need to be utilized to fill immediate needs. Judicious use of the Cash Reserve will be especially important if commodity prices remain low and state revenue growth continues to lag below projections.
Tax reform is expected to play a central role in the upcoming session. Rural senators will continue to address reform of the property tax system, including restoring equity in the burden placed on local property taxpayers to fund K-12 education. Urban interests and the State Chamber of Commerce are advocating for reduced income taxes and expansion of tax incentives for business. Many special interest groups, including the Nebraska Farm Bureau, are calling for an increase in sales taxes, both by increasing the tax rate and the number of things you pay sales taxes on, including groceries and services.
As tax proposals are introduced, I will address the details of each in upcoming letters to the district. The impact of each proposal on Nebraska families will be my primary focus, with specific attention on the transparency of the tax. I do not support tax increases or attempts to obscure the total tax burden by shifting it to less obvious forms of taxation. I encourage voters to keep a close eye on the increases and shifts being proposed, carefully assessing how they will impact their family and business budgets.
All in all, several hundred individual bills will be introduced during the first ten days of the Legislative Session. You can track the introduction and progress of each bill on the website of the Nebraska Legislature at http://nebraskalegislature.gov . If you have any questions about a specific bill, please contact my office at 402-471-2732. Answering the phone will be my administrative assistant, John DeWaard, or Jessica Shelburn, my Legislative Aide. You can also reach me via email at email@example.com.
Merry Christmas and Happy New Year to all residents of District 38! As family and friends gather to celebrate the holiday season we have the opportunity to express our gratitude for the blessings bestowed upon each of us. As we look forward to 2017, it is natural to pause and reflect upon the past year. Families across Clay, Nuckolls, Webster, Franklin, Kearney, Phelps, and Buffalo counties have much to be thankful for.
For most farmers across District 38 this year brought bumper crops at harvest. Although crop prices are down significantly from previous highs and the cost of production has risen markedly, we are grateful for exceptional yields. Environmental stewardship, judicious use of advanced biotechnology, and careful water management were able to overcome the challenges of a record setting dry summer across much of south central Nebraska.
Livestock production and the economic development it brings to a community continued to grow in spite of low prices at market. By working together with neighbors and local officials, livestock producers across the area opened new facilities and saw the expansion of others. While some regions of the state saw acrimony and conflict associated with livestock operations, communities across District 38 demonstrated the value of an open process and the power of cooperation in bolstering our local economies.
Our local communities rallied around successful athletic teams in our schools, successfully hosted many annual festivals and events, and held countless dinners and fundraisers for families in need throughout the year. At a time when many families are coping with less than in previous years, the spirit of generosity throughout our local communities remains unchanged. Support for our neighbors is a part of our daily life.
Citizens across the District stepped forward this fall to serve in elected offices on school boards, city councils, and all of the political subdivisions that constitute our local governments. Willing to give generously of their time and expertise, local leaders are essential to many of the most visible aspects of government in our daily life. Although most media coverage focussed on the contentious nature of the national races, local civic participation remains strong.
There is no doubt that challenges lie ahead for Nebraska. Slowdown in the ag economy has contributed to slower than projected growth in state revenue. The state budget process looms ahead. Debates about the best path forward for Nebraska’s tax system have escalated. Tensions persist between local and state government.
However, challenges present opportunities for innovation and creative solutions. With communication and effective leadership at all levels, adversity has the ability to unite and foster cooperation. As Nebraskans, our crops get hailed out and we plant again. We suffer a loss and we rally together and build anew. It is who we are.
I am grateful and appreciative of the engagement and participation of all residents across my legislative district. I value the conversations, calls, and prayers of all of you as I do my best to represent you in the Nebraska Legislature. My greatest gratitude is for my family and all who have gone the extra mile to help out during my time away from home to serve in the Nebraska Legislature. Without their generosity and sacrifice, my service would not be possible. God’s blessings to you and your family this holiday season.
With the start of a new legislative session approaching, coverage and discussion about proposed legislation and policy is ubiquitous. Special interest groups are actively promoting their agendas, using press conferences, media releases, and legislative forums to influence public opinion in favor of their positions. Amid the flurry of different proposals and headlines, it can be difficult for voters to clearly see and understand who is influencing a specific policy.
The success of the Unicameral Legislature relies on the active participation of citizens. The design of the single house legislature assumes the people of Nebraska will function as a “Second House” to provide the critical link that ensures state government is accountable to the citizens of Nebraska who created it. In the absence of the active voice of the people, paid professional interests exert disproportionate influence on the legislative process.
Amid the demands of work and family, keeping track of the status of bills and debates in Lincoln understandably is not a high priority for most. Too often voters do not feel they have the ability to have their voice heard or to influence legislation. Taking time off work and away from family to testify at a bill hearing in Lincoln is not possible for most working families. For those of us several hours from Lincoln, the challenge is even greater.
The legislative process in Nebraska is structured to provide several opportunities for public input. Understanding the sequence by which legislation proceeds through the Unicameral enables voters to identify all of the points they can influence the outcome. The process begins very early in the legislative session.
Bills must be introduced during the first ten legislative days of the session. Based on the current legislative calendar, every bill will be available to the public by January 18. After official documentation and assignment of a bill number by the Clerk’s Office, each bill will be referred by the Referencing Committee to a specific committee of jurisdiction. The path from that point forward will be determined by the committee process.
Every bill introduced is required to have a public hearing. Scheduling of bills is determined by the Committee Chair and published in advance of the hearing. Committee hearings are open to all members of the public, who can provide verbal or written testimony. All hearings are broadcast live for viewing across the state. If you are unable to attend a hearing in person, you can submit written testimony to be included in the official public record via mail or email. Address your testimony to the office of the Committee Chair. Watching the hearing via the broadcast will also help you understand the politics behind a specific bill.
Participating in the public hearing can be a very effective way to have your voice heard. The Committee Statement of each hearing will list the names of opponents and proponents of the bill. In addition, your comments will be part of the official public record. Senators frequently make amendments to bill language during the Committee Process, so influencing specific components of a bill is easiest at the committee level.
Lack of voter engagement threatens the very foundation of our representative democracy. Keeping informed through reliable and unbiased media reports, personal participation in the process, and accessing all bills, proceedings, and votes through the Legislative website is critical. Should you wish to testify at a hearing or engage on a particular bill, please do not hesitate to contact my office for assistance. The system works best when all citizens feel their voice has been heard.
Biotechnology impacts the life of every person in District 38. The food we eat, the medical care we receive, and the biofuels we use to power our cars are the product of innovation in the life sciences. Improving quality of life and promoting economic development across Nebraska, biotechnology and the biosciences unite private industry, academic institutions, and government in the research and development of new products based on biological systems.
The Biosciences Industry encompasses many of Nebraska’s largest business sectors. Building upon the strong influence of biotechnology in agriculture, companies producing advanced products for both crop production and animal health call Nebraska home. As the second largest producer of ethanol in the nation, Nebraska supports the infrastructure, technical expertise, and logistical support for the renewable fuels industry, a biosciences enterprise. Associated with renewable fuels production are a multitude of additional bioscience industries, from advanced enzyme production for use in ethanol distillation to the refinement and production of additional chemical products.
In addition to agriculture, research in cutting edge medical care and delivery at academic institutions across the state provides the foundation for a strong biotechnology sector in pharmaceuticals, vaccines, and medical devices. Some of the largest employers in communities across greater Nebraska manufacture high technology medical products.
Innovation in the life sciences applied to agriculture, manufacturing, fuel production, and health care has created a robust biotechnology sector that continues to expand in Nebraska. In addition to significant investment in capital and infrastructure, the biosciences sector provides high-skill, high-paying jobs. With average wages in biotechnology companies more than 50% higher than the state average, growth of jobs in the biosciences sector has the potential to impact communities of all sizes across Nebraska.
A recent hearing of the Biosciences Steering Committee featured discussion of a report produced by the biotechnology industry outlining some of the greatest challenges to growth of biosciences companies in Nebraska. Among the typical list of industry concerns of tax incentives and economic development programs, the availability of an adequate workforce emerged as one of the major obstacles.
Bioscience companies are highly regulated to protect the health and safety of the public and insure the integrity of biotechnology products. In addition to technical skills, employees must have command the of the highly specific processes required. Employees of all levels of education from high school through graduate degrees are needed in positions throughout Nebraska’s biotechnology industry. Developing workers with the skill set to work in a regulated environment is essential to continued growth of the biosciences sector in Nebraska.
Just as bioscience companies span across multiple disciplines and industries, the development of a workforce able to fill these high-paying jobs will require a similar cooperative approach. Initiatives that partner companies with educators in K-12, vocational, and undergraduate programs can provide critical guidance to promote effective job training. The first step is awareness of the value of a strong math, science, and technology education that leads to a successful career in the biosciences sector. Ultimately, a job in biotechnology does not mean working in a laboratory in a far off city. It may be the ethanol plant, local manufacturer, or ag business just down the road.
Incentivizing companies to locate, stay, and expand in Nebraska is a never ending conversation among local and statewide leaders in both the private sector and government. Gaining headlines when companies leave Nebraska and take jobs with them, such as recently with Con-Agra and Cabella’s, state incentives offered to private companies have become a mainstay of business recruitment. Incentives take many forms, from offering land, infrastructure, or utilities at a reduced rate to reduced tax rates, tax credits, and tax exemptions.
In theory, the incentives promote economic sustainability by attracting and retaining businesses that create jobs, purchase local goods and services, invest in infrastructure, and create additional economic activity. The supporting argument purports that the cost of the incentives–either in direct investment or forgiven tax bills–will be less than the additional economic activity and income generated by the company. The logic relies on the “but for” principle: that a company would not create those jobs, make the investment, or produce those goods without the incentive being offered. Nebraska would lose out on that economic activity but for the incentives.
The Legislative Performance Audit Committee recently released a report detailing the first major attempt to evaluate the outcomes of the business incentive package known as the Nebraska Advantage Act. Created by LB 312 in 2005, the Advantage Act is a multi-tiered program of business incentives, primarily offering a reduction in the taxes paid by a qualifying company. Companies qualify for tax credits for specific levels of investment, as well as compensation credits for addition of new full time equivalent (FTE) positions. Evaluation of the performance of the Advantage Act is overdue, as the annual cost of the program has exceeded the original $60 million originally projected in 2005. I serve as the Vice-Chairman of the Performance Audit Committee, and have been involved in the study process.
Determining the actual impact and return on investment of the Nebraska Advantage Act is not a straightforward task. Many of the important questions asked by the committee were impossible to answer with certainty. These include the number of new full time jobs created, the salary level of incentivized jobs, and the permanency of the new FTEs. Specific reporting of these metrics was not required of companies who received the tax breaks. For example, the addition of a single FTE does not equal a new position associated with a single person. It could be additional hours added for multiple part time workers, or several new part time jobs for two or more workers. Salary data and length of time the job existed, including whether the job remained after the incentives were provided, was not tracked for the incentivized FTEs.
From the data that was available to analyze, the cost to create each new full time equivalent job ranged from $24,500 to $320,000. Of the 78 companies that participated in the Advantage program, only 9 were new to the state of Nebraska. Whether those statistics are meeting the objectives of the incentive program or falling short is impossible to assess, as benchmarks were not established clearly identifying what constitutes “success” of the Advantage Act when it was passed into law in 2005.
Revision of the Nebraska Advantage Act and the state’s package of business tax incentives will be a topic of significant debate during the coming legislative session. The Performance Audit report demonstrates how important clearly identifying objectives, setting benchmarks for performance, and collecting needed data are for the development of good public policy. Growth of the economic base of Nebraska is vital to the sustainability of our communities. Now, more than ever, effective policy that achieves the desired outcome is vital to Nebraska’s growth.
A topic likely to take center stage during the upcoming legislative session is sales taxes. Although a frequent topic of discussion, the current decrease in state revenue compared to previous projections has amplified discussions about increasing the sources of revenue to the state General Fund.
Nebraska currently has a state sales tax rate of 5.5%. Many cities also assess additional local sales taxes, which are collected along with state sales tax and returned to the community where they are spent by the local government. The foundation of Nebraska’s current state sales tax was passed in 1967, following ballot initiatives that eliminated the state income and property tax. Compared to other states, Nebraska was relatively late in adopting a state sales tax. When implemented, the Nebraska sales tax code represented many valuable lessons learned from other states.
Nebraska’s 5.5% tax is assessed on the sales and use of certain goods. Many services are not subject to sales tax. To avoid multiple taxation and a cumulative effect of sales and use taxes on produced and manufactured goods, component parts or business inputs are also not subject to sales taxes. Also, the sale of items from one business to another for eventual retail is not taxed, rather the tax is collected only once at the point of final retail to the end consumer.
When compared to other forms of taxes, sales tax is considered one of the most regressive forms of taxation. Because sales tax is assessed without regard to income and is charged on goods utilized by every household, a greater proportion of lower income family’s money will be paid in sales taxes as compared to the proportion of income paid by a higher earning family. Thus, many items deemed essential are not subject to sales and use taxes. These include food, medicine, and medical care.
Much of the current discussion revolves around the concept of expanding the sales tax base. This means charging sales tax on goods and services that are currently not taxed. For example, you currently do not pay sales tax to get a haircut, but you do on hair products you purchase. Sales tax assessed to personal care services would mean that you would now pay 5.5% of the value of your haircut as tax to the state General Fund. Sales taxes on professional services ranging from accounting to pet grooming, food and groceries purchased for preparation and consumption in your home, and business components used in manufacturing and agriculture have all been mentioned as potential sources of new state revenue.
The implications of sales tax changes are not always obvious. Sales taxes are a less transparent form of taxation, paid in small amounts as part of a larger bill over time. Additionally, projecting the revenue from expanding sales tax to previously untaxed goods and services is also complicated, as there is no existing documentation of exactly how much goods and services are purchased by Nebraska consumers.
The effect on additional taxes on consumer behavior is also difficult to predict. In some cases consumers may not be able to afford the additional cost and simply not purchase. in other cases we may see changes in where people purchase to avoid taxation. This is seen frequently with the expansion of online purchases by Nebraskans from retailers who are not required by federal law to collect sales tax at the point of purchase. “Border bleed” is another phenomenon in which people physically travel to a surrounding state that does not charge the tax on a particular good to avoid the additional cost.
It is my assertion that the dollars earned by Nebraska working families belong to them. The burden for demonstrating the need to take money out of your pocket lies with the state. In contrast, many lawmakers see goods and services currently not subject to taxation as revenue “lost” or “given up” by the state. I disagree with such characterization, and will proceed cautiously with any action that increases the sales taxes paid by Nebraskans.
In October the Nebraska Economic Forecasting Board decreased the projections for state revenue generated by sales and income tax in Nebraska during the next year. Put simply, the amount of money coming into the state General Fund will be less that was expected. Following the downgrade in the Revenue Forecast, several misconceptions about the fiscal condition of the state have emerged.
The state of Nebraska builds a two year budget based on revenue it expects to receive during that period. The primary source of revenue for the General Fund, the discretionary budget for all practical purposes, is sales and income taxes. The projection is based upon economic models that attempt to predict how much money you will spend on taxable goods and what your taxable income level will be over the course of the next two years. For example, for the Fiscal Year that ended in June of this year, the Forecasting Board projected in its October 2015 certified forecast that $4.4 billion would be paid in sales and income tax. The year closed $95 million short of that projection. Nebraskans paid about $40 million less in sales taxes and $79 million less in personal income tax than anticipated. On the other hand, miscellaneous tax revenues were up over $33 million from projected.
It is important to note that while revenues were lower than projected, the total taxes collected by the General Fund have increased. Despite closing out $95 million less than projected, $4.403 billion was paid by Nebraska taxpayers. So despite all of the discussion of shortfalls, Nebraskans paid $183 million more in taxes contributing to the General Fund than the prior year. This increase is a historical trend. In 2014 receipts were $4.021 billion, in 2015 $4.220 billion. Even the downgraded projections going forward show increases in taxes paid. The difference exists in how large the amount of taxes paid increases.
Recognizing the state budget is constructed based on projections is important. Unanticipated circumstances that change the spending habits or income of Nebraska families will change the forecast. National tragedies like the September 11 terrorist attacks and the rapid collapse of the housing market in 2008/2009 were major economic shocks. The rapid depression in agricultural commodity prices and the magnitude of the decrease has led to the lower than expected revenue currently seen.
This process is opposite of how local governments like cities, counties, schools, and NRDs develop their budgets. Using property tax dollars, local officials use property valuations from the previous year to set the levy rate to collect the exact amount of dollars they wish to spend. There is no uncertainty in their budget, as it is based on actual values a year in arrears.
The decrease in revenue from projections in the current fiscal year has resulted in the myth that Nebraska passed a deficit budget. The Nebraska Constitution requires a balanced budget, and the the original budget passed in 2015 and the mid-biennium adjustments made were balanced with projected revenue. Because the revenue expected was not received, adjustments in spending or transfers from other sources, such as the Cash Reserve, will be required to meet the Constitutional requirement. Nebraska will not accumulate a budget deficit. It constitutionally cannot.
The often cited $900 million projected budget shortfall is a cumulative total over the next three years and is calculated based two assumptions. First, it is based on revenue projections that extend out until June of 2019, which assume Nebraskans will pay more in income and sales taxes each year, just not as much more as projected a year ago. Second, it is based on an assumed growth of the state General Fund budget of 4% each year in the next budget cycle. This figure is based on the assumption that the General Fund will spend over $600 million more in fiscal year 2018-2019 than it did in the year just ended. Should the state budget simply not increase in the next two years, that $900 million figure drops considerably.
There is no doubt that managing the decisions will be complicated and politically charged. That said, Nebraska is in strong fiscal condition as a state. Through careful prioritization of your tax dollars and a decrease in the growth of government spending, Nebraska will remain fiscally healthy.
Medical clinicians utilize the concept of triage to address complex cases. When a patient presents with multiple clinical conditions, the order in which each issue is addressed and solved is determined by the threat each problem poses to survival. Most families in District 38 use a similar triage process for their household finances. In order to decide how to budget limited family resources, the most important priorities are addressed first. Business owners approach management decisions with the same emphasis, prioritizing the structural soundness of their operations.
Nebraska’s tax system is in need of modernization. A comprehensive review and series of public hearing across the state conducted by the Tax Modernization Committee in 2014 demonstrated the need for reform of Nebraska’s tax code. Additional analysis by policy groups across the political spectrum have recognized the need for significant changes to Nebraska’s tax system, although what those revisions are and who should pay more taxes can vary based on the political ideology of the group.
Clear consensus exists for significant changes to Nebraska’s tax system. Acrimony arises as to which taxes should be altered and how reform should be achieved. State senators have direct control over the rates and policies surrounding state income and sales tax. These are the taxes that make up the bulk of the dollars in the General Fund of the state budget. In contrast, property tax rates and the expenses they pay for are determined primarily by local subdivisions. State policy has a secondary effect on those taxes.
A trauma patient may have multiple problems when arriving at an emergency room. Those that threaten the life of the patient must be addressed first. Although a broken leg looks disconcerting and causes great pain, it is second in priority to stopping an active hemorrhage. It does little good to have intact legs if the patient bleeds to death first.
In a similar fashion, it is imperative that state and local government address the hemorrhaging of property tax dollars from Nebraska’s families, farmers, ranchers, and business owners before addressing structural changes to Nebraska’s income tax code. While I support a reduction in income taxes as a means of encouraging economic growth, the impact of such changes can only be felt if the individual families have greater income and more purchasing power.
Excessive property tax bills jeopardize the ability of senior citizens on fixed incomes to remain in their homes, and has put home ownership out of reach for young families. Business ownership and job creation are stifled by the ever rising fixed costs of property taxes that have no relationship to profitability or management decisions.
Ultimately, Nebraska’s out of date school funding formula and excessive growth of local political subdivision budgets have created a property tax system that threatens the economic viability of families, small businesses, and agriculture throughout Nebraska. The net effect reduces income tax revenues and erodes Nebraskan’s purchasing power, threatening the economic outlook and state revenue forecast for years into the future.
Lawmakers would be prudent to follow the principles of triage and fix the inequities within the property tax system that threaten all families and businesses in Nebraska first. Once the fiscal hemorrhage of Nebraska families, businesses, and farmers created by property taxes has been stemmed, reasonable and effective changes to Nebraska’s income and sales tax codes can be responsibly addressed in a predictable fashion. Local elected officials must be willing to exercise the same fiscal discipline as state lawmakers to collectively embark on a multi-year modernization of Nebraska tax policy. Political gamesmanship and special interests must not prevent sound policy of importance to all Nebraskans.