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Transparency and public access to voting records and the legislative process is my top policy issue. Open discussion of the votes of elected officials is essential for voters to make informed decisions at the ballot box. Citizens need objective, factual information to empower them to effectively engage in their government. Every recorded vote of a state senator is available to the public on the website of the Nebraska Legislature at www.nebraskalegislature.gov.
Special interest and lobby groups routinely publish “scorecards” and rankings of votes on specific issues. While the intent and motivation of these scorecards is to promote the interests of the particular lobby group, they provide another opportunity for voters to see how their senator voted on specific bills. For voters to glean useful information from these special interest publications, careful attention should be paid to how the information is presented, which issues and votes are considered “record votes”, and the methodology used to calculate voting percentages and rankings.
To illustrate the challenges in understanding exactly what is presented in these scorecards, I will use the recently released Nebraska State Chamber of Commerce 2017 Legislative Voting Record as an example. The report is based on ten record votes of interest to the Nebraska Chamber of Commerce and calculates an annual and cumulative voting percentage of specific votes selected by the Chamber.
To begin, the information published in the table of recorded votes is not straightforward. It identifies issues only by number, 1 through 10, with the senator’s vote recorded as a “+”, “-”, or “?”. Contrary to what a voter my initially think, a “+” does not mean a “yes” vote, nor does a “-” indicate a “no” vote. Rather a “+” refers to a vote, either yes or no, that is the same as the position of the State Chamber, while a “-” reflects a vote in opposition. Thus, if the State Chamber opposes a bill, a “no” vote would be listed as a “+” on the voting record. In order to determine how their senator voted on a particular issue using this table, a voter would need to know first which bill the number on the chart refers to and what motion the vote was for. Next, what the State Chamber’s position was on the motion, then interpret what the “+” or “-” means.
Voters also need to carefully examine which votes are selectively determined as “record votes” by the special interest group publishing the scorecard. Of the hundreds of votes taken, and many on a single bill, groups may pick a procedural vote or a vote on an amendment, not necessarily the vote on final passage of an entire bill. For example, on the State Chamber scorecard, they include two different votes on a single bill, LB 461, among their ten record votes. Both are motions to return the tax reform bill to committee, one during General File debate, the second during Select File debate. If a voter were only to look at the voting percentage, they may not realize the total is weighted heavier by the same vote on the same motion on two separate rounds of debate on a single bill.
Remember, the votes selected for scorecards are not objective. They are intended to present a particular special interest point of view. Votes can be selected with the intent of making specific senators look favorable or unfavorable to target audiences. The information is presented to lobby and persuade, not to inform.
I encourage voters to go to the Legislature’s website and examine all of my votes on any bill. If you have questions about why I voted how I did on any motion, please contact my office. Whether you agree or disagree with my vote, I am happy to explain my position. I do not cast my votes in obligation to any special interest group or in hope that it may produce a favorable ranking or scorecard, but in my assessment of the best long-term policy interest of District 38 and the state of Nebraska.
Most of us think of early July in the context of Independence Day celebrations, summer baseball, and long hours irrigating. July 1 is a significant date in state government, marking the beginning of the new fiscal year for the state of Nebraska. Running from July 1 to June 30, the new fiscal year operates using the biennial budget adopted in the past legislative session. Although the start of the fiscal year means implementation of the new budget, most of the statutory changes passed by the Legislature during the 2017 session will not become effective law for another 30 days or more.
The lawmaking process in Nebraska has a number of important delays built into the system. For example, there must be five legislative days between the introduction of a bill and a vote on Final Reading, the third and last stage of debate. Moreover, a bill must layover a full legislative day after being advanced to Final Reading before the vote can be taken. These delays provide a minimum time for the public to access, read, and provide input on legislation before it can be passed by the Legislature.
Once a bill has been passed by a majority of the senators and signed by the Governor, it does not become effective law until three calendar months from the date it is signed. This 90 day delay has several practical implications. First and foremost, the 90 day time period is critical to the referendum process in Nebraska. Voters of Nebraska have the ability to overturn any law passed by state government via public vote. If 5% of registered voters sign a petition within the 90 days following passage of a bill, the bill will be considered by all voters on the next General Election ballot. Since General Elections are only held in November of even numbered years, the law may take effect before the people vote. However, if 10% of registered voters sign the petition, the bill is barred from becoming law until after the public vote. A simple majority of General Election voters then determines whether the law is repealed or allowed to remain.
In addition, the three month delay allows adequate time for those impacted by the new law to understand how to fully comply with the statutory changes. State agencies with the responsibility to implement or modify programs as a result of the bill may need to promulgate and adopt new rules and regulations or issue Request for Proposals for contracted services. The regulation process also has specified time periods for public input, and the RFP process is intended to provide open, fair access to all willing bidders.
In some cases, bills passed need to take effect sooner than 90 days after passage. To eliminate that delay, bills must include in their language an “emergency clause”. A bill with the emergency clause will generally have the phrase “to establish an emergency” in the bill description on the first page of the introduced copy, and will contain the phrase “since an emergency exists, this act takes effect when passed and approved according to law” in the text of the bill. Bills with an emergency clause will also be identified with the letter “e” following the bill number of the Final Reading agenda. A two-thirds majority of 33 votes is required on Final Reading to pass a bill with the emergency clause, as opposed to a simple majority of 25.
Passing a bill with the emergency clause does not mean “emergency” in the common useage of the term. While it may, as in the case of a special session or a deficit appropriation, it generally is included when it is most practical to have a new law take effect at the start of a new fiscal year on July 1, not later in August or September. The merger of the Department of Roads and Department of Aeronautics into the Department of Transportation is an example of a change that was most efficient at the start of the new fiscal year, but not what one might call an “emergency”. LB223, a bill of mine this past session, passed with the emergency clause to authorize prescriber’s designees to input data into the Prescription Drug Monitoring Program as soon as the bill was signed into law, making the PDMP system more efficient for prescribers.
While government is frequently criticized for its inefficiencies, delays such as these are essential to provide adequate access of the public to the lawmaking process. If you followed a particular bill that was passed into law this past session, you may still be able to influence its implementation. The more comprehensive the public input in the process, the more effective the law will ultimately be.
Discussion of taxes in Nebraska typically centers on property, income, and sales taxes. The state sales tax, along with corporate and personal income taxes, provide approximately $4 billion to the state General Fund annually. Local option sales taxes and property taxes are levied and spent by local governments, totaling another $4.3 billion. However, in addition to the “big three”, nearly $1 billion in taxes are collected through over 20 distinct miscellaneous taxes collected by state and local governments.
Almost $600 million is collected by the Motor Vehicle Fuel Tax, Motor Vehicle Registration Tax, and the Motor Vehicle Registration Fee. The Motor Vehicle Fuel Tax, commonly known as the “gas tax”, is determined by three components. The fixed portion is a two-thirds/one-third split between the Highway Cash Fund, used by the state, and the Highway Allocation Fund, which is used by local cities and counties. The wholesale portion, which is 5% of the 6-month average wholesale fuel price, is split between state and local government in the same proportion. The third component, known as the variable rate, is adjusted semi-annually to meet the funding needs of the state Highway Cash Fund. It runs around 2.5 cents per gallon. Motor Fuel Taxes generate over $330 million annually to fund state and local road construction and maintenance.
When you renew your motor vehicle registration every year, two separate taxes are assessed. The Motor Vehicle Registration Fee is spent by the cities and counties, and is typically the smaller of the two taxes. The fee you pay is the product of a fraction based on the age of your vehicle and a base fee determined by the type of vehicle you own. Over $20 million is distributed to cities and counties from this fee.
The Motor Vehicle Registration Tax is calculated based on the manufacturer’s suggested retail price (MSRP) for you vehicle when sold new, regardless of what you paid. Each $2,000 interval has a base tax, which is fully assessed when new, with a declining proportion assessed each year until the vehicle is 14 years of age or older. For a $30,000 MSRP vehicle, the first year tax would be the full base of $500. The next year, the tax would be $450, the third year $400, and so on. The almost $250 million collected annually is distributed to and spent by local governments. Regardless of where you live, 60% is distributed to your school district. If you live in a city, 22% is distributed to the county, while 18% is distributed to the city. If you live outside a city, the entire 40% remaining is distributed entirely to the county.
Taxes assessed on vehicle ownership and use are only but three of the additional taxes. Often called “sin taxes”, almost $100 million is annually collected on the sale of alcohol, cigarettes, tobacco products, and gambling, including charitable gaming, keno, and pari-mutuel wagering. The revenue generated is distributed among a wide variety of funds, including the state General Fund and cash funds to support an array of different programs.
Nebraska is one of only six states that charges an Inheritance Tax on the transfer of assets to beneficiaries after death. The rate of the tax and the amount of property exempt from taxation is dependent upon the relationship of the beneficiary to the deceased. The tax is assessed based on the current market value of the property and is paid directly to the county. Over $70 million is collected annually by counties from the Inheritance Tax.
Additionally, any time real estate is sold in Nebraska, a tax of $2.25 per $1,000 of value is assessed. Known as the Documentary Stamp Tax, the revenue collected is distributed among a number of funds. The County General Fund in which the real estate is located receives 50 cents of the $2.25, while the remainder is split among four state funds: the Affordable Housing Trust Fund, the Site and Building Development Fund, the Homeless Shelter Assistance Trust Fund, and the Behavioral Health Services Fund. For example, the sale of a $100,000 home would be assessed a $225 “Doc Tax” upon transfer of the legal title of the property.
Accounting for all of the various taxes assessed by state and local government is essential for any discussion of changes in tax policy. Unless spending is decreased or held static, reducing one tax typically results in an increase in another. Shifting the source of the revenue can eliminate inequities, but can also exacerbate them. Isolating one tax from the comprehensive list fails to consider the full implications of any change in tax policy.
Following adjournment of the Legislative session, legislative staff and committees begin work on interim study resolutions. These study proposals, designated with the “LR” prefix, can be submitted by individual senators or standing committees. Each study is referred to one of the standing committees, where Committee Chairs prioritize the resolutions and determine whether a public hearing will be held. This year 127 different studies were introduced. A full list of the interim study resolutions and their full text is available on the homepage of the Nebraska Legislature’s website.
Interim studies vary significantly in their depth and purpose. Public hearings are not required and are at the discretion of the chair. Interim studies tend to be political, rather than objective, in nature. They should not be confused with a performance audit, which is an objective study of a legislative program with defined standards for analysis conducted by trained professional auditors. Interim studies can be used to research future legislation, providing an opportunity to identify stakeholders that may engage on an issue. They may also examine a concept that failed to advance in a prior session, helping to refine and improve legislation for future years.
This year I introduced two interim study resolutions. The first, LR 190, is to study the creation of an Ethics Committee in the Nebraska Legislature. Outside of issues of campaign finance under the jurisdiction of the Nebraska Accountability and Disclosure Committee, there are no ethics rules for members of the Nebraska Legislature. Consequently, there is no process for addressing ethical concerns among members of the Nebraska Legislature unless it is illegal activity defined by statute via the courts. The public assumes there are rules and a process in place for ethical conduct, even though none exist.
During my three years in the Legislature a number of ethical issues have emerged with no guidance for resolution. These include concerns of conflicts of interest, senators registering to lobby while in office, personal use of state resources, and expectations of residency within a district among others. Public confidence in the legislative process necessitates greater transparency in the ethical expectations of state senators. LR 190 has been referred to the Executive Committee.
My second interim study, LR 242, examines the feasibility of adopting a zero based budgeting process for state agencies. Zero based budgeting is a process for building a budget that begins at “zero” and requires justification for each component of the budget request. Thus, the budget is built each time based on the current priorities and needs of each agency.
Currently, the Nebraska state budget is developed using a “baseline budget” process. This means that a new budget assumes the previous year’s budget will be supplied, with the appropriations process focusing primarily on the addition of new spending programs to the prior budget base. No justification of need is required for previous funding, nor accountability for the use of taxpayer dollars appropriated before. This process can promote inefficient use of state funds, as well as distort revenue and spending needs. For example, the often cited $900 million shortfall at the beginning of the year was not based on actual spending decisions, but an assumption that state spending would grow during the next two years at an annual rate of 6%.
As progress is made on each of these two studies, I will continue to update constituents of District 38. My office will also be undergoing a staff change. John DeWaard, my Administrative Assistant, will be leaving to start medical school in Missouri at the end of the month. Although he will be missed greatly in the office, I am excited to see my former student and research advisee move forward in his medical career. Jessica Shelburn, my Legislative Aide, will be staffing the office alone until John’s replacement is in place. I do ask for your patience as we accommodate summer schedules during that time.
A term frequently used to describe state policies is “unfunded mandate”. In general, this refers to a statute that requires a government to take an action or perform a function without directly providing funds. The term originated in reference to laws and regulations passed by the federal government that required state action, while requiring states to pay the bill through taxes assessed by the state level. National environmental regulations are often cited examples of federal unfunded mandates upon the states.
In recent years local political subdivisions, including cities, public schools, natural resource districts, and others have adopted the practice of describing state statutes as unfunded mandates, drawing a parallel to the federal practice. The comparison, however, is not equitable. The legal framework between the federal government and the states is distinctly different from the relationship between the state government and the local political subdivisions it creates.
Specifically, under the U.S. Constitution, the federal government does not have absolute power over the states. Known as federalism, the states are seen as distinct and autonomous of the national government, which has specific enumerated powers listed in Article I, Section 8 of the U.S. Constitution. Furthermore, the Tenth Amendment states “the powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
This is in stark contrast to the relationship between the state government and the local political subdivisions it creates. Nebraska is known as a “Dillon’s Rule” state. As described in the 1868 court case that established the doctrine, “municipal corporations owe their origin to, and derive their powers and rights wholly from, the legislature. It breathes into them the breath of life, without which they cannot exist. As it creates, so may it destroy. If it may destroy, it may abridge and control”. Thus, local governments are not entities of themselves. Their creation, authority to tax, ability to spend, and areas of jurisdiction are granted entirely by the Legislature. They cannot exercise any authority not specifically granted to them by the Legislature.
To that end, local governments’ ability to tax is granted by the Legislature, which provides funding for the responsibilities required of them by the Legislature. Whether or not funds from the state treasury follow a particular statutory requirement is irrelevant, as the ability to collect property taxes, sales taxes, issue bonds, and charge fees are granted by the state. Local governance set the priorities for how they choose to implement state authorized taxing authority.
It can be amusing to see what activities local subdivisions label “unfunded mandates”. These include Natural Resources Districts’ labelling compliance with their resource management plans as such. Managing their resources is their primary reason for existence. Municipalities list public records compliance and public notice publication requirements as unfunded mandates, despite these are essential functions of local, citizen led government. School districts cite assessment of student learning. By such broad and illogical definitions, any local government activity paid for by local tax dollars is an “unfunded mandate”. That does not stand up to reason, nor is it consistent with Dillon’s Rule.
Because the term is politically charged, it is often used to generate opposition to a bill. For example, this past session, the education lobby, in opposition to LB 651, called requiring all third grade students to be grade level proficient in reading an unfunded mandate. Nevermind that teaching reading is the primary function of early elementary education. In contrast, LB 427, which required schools to provide physical accommodations and an academic support plan for pregnant and breastfeeding students, was supported by the Nebraska State Education Association in the committee hearing. No funds were provided by the state to build and maintain these required facilities, nor to develop the individualized learning plans for student mothers. The term “unfunded mandate” was rebuffed by proponents during floor debate. It is important to note that the teacher’s union saw developing plans to enable elementary students to read at grade level as an unfunded mandate, but not individualized accommodations for high school mothers wishing to breastfeed during the school day. The inconsistency between the two positions reflects political ideology, not principle.
Local governance of our communities is a hallmark of Nebraska. The ability of locally elected officials to make decisions as close to taxpayers is critical. Serving in locally elected office requires just as much dedication and responsibility as serving at the state level. Prioritizing taxing and spending decisions locally can be especially difficult, as the decisions directly impact your neighbors, coworkers, and community.
I fully support local control, but recognize there are instances where inconsistencies based on arbitrary political boundaries are not in the best interest of Nebraskans, either locally or statewide. As establishments of the state, local governments must exercise extreme prudence and accountability for prioritizing tax dollars and imposing regulations. In turn, the state must judiciously exercise its authority over the political subdivisions it creates. Cooperation is vital to representing the best interests of the ultimately arbiter of political power: the individual citizens.
As your state senator, I have the responsibility to study the facts of policy issues in depth and make decisions based on evidence. Our democratic republic operates upon a level of trust that elected officials act in a logical, reasoned manner using valid evidence. For representative government to be successful, voters must also critically and skeptically evaluate information presented to them.
This is no easy task. We all have our own preconceived biases and ideology influencing our objectivity. Nobel-prize winning physicist Richard Feynman summed up our ability to misinterpret information by stating “the first principle is that you must not fool yourself, and you are the easiest person to fool”.
A frequent logical error in political rhetoric is known as the “false dilemma”. This strategy reduces an issue down to an either-or decision, with one choice being mutually exclusive of the other. Many of the funding discussions during the past legislative session were portrayed as such a false dichotomy. For example, it has been asserted that since I did not support the full request for funding increases for developmental disability, mental health, or other health care providers, then I do not support the disabled, the elderly, or the vulnerable. This is a false choice.
When I cast a vote on a budget item, there are many constituencies I must consider: those who receive the funds, the taxpayers who pay for it, and other programs that must be prioritized for finite funds. My consideration must also take into account the magnitude of the funding, as well as the current and future trends in revenue and needs of the state. There is no “either-or” choice. The costs and benefits are spread across a continuum, with multiple choices and outcomes.
With regard to the state funds appropriated to programs that assist vulnerable Nebraskans, I voted to invest $833 million each year in Medicaid, $149 million in developmental disability aid, $104 million in public assistance, and $72 million in behavioral health aid. The two year budget funds Medicaid at 99.2% of the prior biennium, developmental disability aid at 99.1%, public assistance at 98.5%, and behavioral health aid at 98.9%. Supporting $2.3 Billion of General Funds over the course of a biennium is a significant commitment to vulnerable Nebraskans. Furthermore, the Department of Health and Human Services is confident it can manage these small, target reductions through operational efficiency without reducing funds available for care. The false dilemma created by the political rhetoric is not logical.
Evidence and factual data are essential for sound policy. From a reasoned point of view, the burden of proof lies with the individual making the positive claim. In the scientific method, the hypothesis, or claim, being made is assumed to be false until proven otherwise. This is known as the “null hypothesis”. A failure to meet the burden of proof is best illustrated by the claims made by administrators about reductions to the University of Nebraska appropriation.
Over the course of the biennium, the University received an average reduction of 0.2% over the previous budget. University leadership made a variety of dramatic claims and generalizations about the impact of this reduction. However, they provided no clear evidence of direct, specific impacts to programs, much less harm to the overall mission of the University. It is particularly ironic that higher education administrators would fail in this basic logical tenant, whose roots lie deep within the scientific method and academic inquiry.
The lack of proof is likely because the data to support the claim does not exist. The $1.15 Billion Nebraska taxpayers will invest in the University system during the next two years is not tracked and accounted for beyond the campus to which it is allocated. Following requests to University administration for information about where state tax dollars are spent so I could better understand the potential impacts of any reductions, I was provided only a “best estimate” about distribution of tax dollars. It is impossible to logically evaluate the impact of a reduction in state funding if there is no knowledge of how much taxpayer money each program receives and what the state tax dollars are used for.
Political talking points may make for great headlines, but they fail to adequately capture the complexity of most policy decisions. This is particularly true when discussing issues of funding. Constituents may note that I am not a very “quotable” state senator. Reducing all of the evidence and perspectives of an important issue into a media sound bite is a political skill that continues to elude me.
At the conclusion of the recent legislative session a reporter asked senators to describe the session in a single word. I chose “misinformed”. The Legislature addressed a number of extremely complex policy topics, including a major tax reform package, developing a new budget in light of slowed revenue growth, several programs that made changes to existing property tax authorities and deductions, as well as education issues. A shocking amount of misinformation was disseminated to voters through email, social media, and even inaccurate content in some mainstream media.
It would seem logical that the myriad of ways we now have to communicate electronically would improve the information voters receive. However, the mass quantity of information has come as the cost of accuracy. Politicians are well known for rhetoric, but special interest groups have become adept at using social media, email, and the press to distribute their talking points. Voters need to critically evaluate information, assessing both the source and validity. Newsmedia must carefully fact check statements and press releases before repeating them.
Data is frequently misrepresented to voters with the intention to create opposition to a bill. To illustrate, a message sent to many taxpayers by lobby groups was that LB 461, the tax reform bill, “provided $10 in income tax relief for every $1 of property tax relief”. This claim relied upon a series of assumptions that were unknowable and highly improbable. The income tax number was based on the unrealistically optimistic assumption that state revenue growth would exceed the rate required to trigger the income tax rate reduction every single year for ten consecutive years. The property tax number assumed relatively stable increases in ag lang property values over the same time period, so the valuation growth cap would appear to have little effect. By using two opposing projections, inflating one figure and discounting the other, the comparison was not logically valid. The data was skewed to make the point of the paid special interests and accomplish their agenda, not provide accurate information to voters attempting to objectively evaluate the legislation.
Unless specifically told about the details of the methodology used to arrive at the numbers, voters cannot make an informed decision based on accurate information. Do not assume data is being presented to you by special interest groups in an objective and unbiased manner. That is not their purpose. They are paid to achieve a political result. A folk saying frequently attributed to Mark Twain, “figures don’t lie, but liars can figure”, is particularly relevant when evaluating political messages.
When asked to sign an online petition, cut-and-paste or forward an email, or participate in patch-through calls generated by purchased call lists, ask for the source of the data and evaluate it critically. Misinformation and bad data can go viral almost instantaneously via email, twitter, and other social media platforms. It is not uncommon for my office to receive several hundred identical form emails about a topic, all with the same inaccurate information and special interest talking points. The senders are all well intentioned and acting based on information they think is factual. Frequently it is not.
Voters also must discern between editorial content and factual reporting. Editorials are not intended to be unbiased, nor do they represent objective, fact-based reporting. Few clearly identify the names of their authors. Statements without evidence are mere opinions. In my experience as a state senator, far too much policy is “eminence based” rather than “evidence based”. In other words, who makes the statement is given greater weight than facts. History is littered with examples of eminent individuals being really wrong, from science and medicine through policy and business, when their reputation was given greater value than the evidence presented.
From the first day of the session to the last, theories about coalitions, political pressure, and partisanship were rampant in media coverage and the political gossip mill. It was based purely on speculation and sensationalized conspiracy theories. In reality, the unique circumstances of this session were pretty basic and and not clandestine. Senators talked to each other, sought objective facts outside of special interests and lobbyists, intentionally cooperated to achieve common interests, and actively listened to constituents outside of the echo chamber of the Capitol environment. It is what we are supposed to do. I encourage voters to do the same.
On Tuesday, May 23rd the First Session of the 105th Nebraska Legislature adjourned for the year. Speaker Jim Scheer ended the session on Legislative Day 86, four days short of the maximum 90 days in the first year of the biennium. The Legislature will formally reconvene on January 3, 2018 for a 60 day session. Although the Legislature is not in session, work continues on constituent services, interim studies, and revision of legislation. During the interim period, the Executive Board of the Legislative Council, of which I am vice-chair, supervises the operations of the Legislature as a state agency.
Of the 667 bills introduced during the first ten days of the session, 173 were passed and signed into law. Those bills passed with an “emergency clause” became effective upon their signature by the Governor. The majority of bills will become law 90 days after their signature. Because this is the first year of the biennium, bills not Indefinitely Postponed or “killed” remain active into the next session. 105 bills remain on General File, the first round of debate by the full Legislature, while 9 have advanced to Select File, the second round. Over 300 bills remain in their assigned committee awaiting action.
The primary focus of the legislative session was addressing the lower-than projected revenue in the current fiscal year and developing the next two year state budget to take effect July 1, 2017. In an unprecedented accomplishment, the Appropriations Committee, of which I am a member, held public hearings and advanced a deficit budget for the current fiscal year within the first 6 weeks of a biennial budget session. Work then began on the next two-year budget, which was passed by the full Legislature on Day 79.
Many states struggle to pass a budget, much less a balanced one, within the course of their regular session. Regardless of your political opinions regarding the choices made in the budget, Nebraskans should take pride in the fact Nebraska state government developed and passed not one but two balanced budgets in a single session. While I do not agree with the use of $369 million of one time cash transfers to fund ongoing expenses, we did pass a balanced budget without raising taxes or eliminating state programs.
Going into the session, tax reform was a priority of many legislators. The Revenue Committee did advance a comprehensive tax reform plan that included a new method for valuing agricultural land based on the income it produced, a cap on the rate of valuation increase annually on agricultural land, a consolidation of income tax brackets, an increase in the earned income tax credit for low income families, and triggered 0.1% reductions in the income tax rate for business and families if certain revenue growth levels were met statewide. In theory, the package provided a benefit to all Nebraskans: agricultural land owners, low income earners, middle income families, and businesses.
Although the tax reform plan did not give all special interests everything they wanted, it did provide a step forward toward tax relief for almost everyone. Unfortunately, agricultural groups actively lobbied against the reforms, choosing no property tax relief this year over the basic steps forward offered in the package. Special interests advocating for more state spending, including schools, also opposed the tax reforms. Ultimately, the bill failed to advance, but remains on General File for next year. I was disappointed by the amount of misinformation spread to voters about the tax reform package by special interest groups. In some cases, tax dollars were used against taxpayers to lobby in opposition to their own financial interests.
I will continue my weekly columns throughout the interim. My goal is to provide residents of District 38 with greater insight into a number of topics discussed in the Legislature this session, as well as address topics likely to return next year. If there is a topic you would like addressed, do not hesitate to contact my office and suggest it. I am grateful for all of the newspapers across the district that provide this opportunity for me to communicate with citizens and voters about legislative issues. An informed electorate is the foundation of a successful democracy.
This past week Governor Ricketts returned the budget passed by the Legislature with several line item vetoes reducing spending. Included in the additional reductions was a 0.5% reduction in the operations budget of any agency that had not received a 3% or greater cut by the Legislature, excluding K-12 education and corrections. Additionally, the total appropriation for the Medicaid program was reduced to the original recommendation made by Governor Ricketts in his proposed budget in February. The Legislature passed a budget which had increased that appropriation above the request of the Department of Health and Human Services, which manages Medicaid.
Some members of the Legislature attempted to override the line item veto of the additional appropriation to Medicaid, but the Governor’s recommendation was ultimately sustained. As a member of the Appropriations Committee, I supported the original budget proposal from DHHS throughout the budget process, and did not vote to increase their spending above their request.
Opponents of the line item veto preyed upon misinformation and fears of the public to make their case for increasing the appropriation, rather than the facts. Care of Nebraska’s most vulnerable population is an important priority. Medicaid is the second largest expense in Nebraska’s General Fund budget, and is a program that has seen significant improvement in management of its resources in the past two years. This careful management has resulted in excess appropriations which have been returned to the General Fund over the past two fiscal years.
Any claim that the reduction to the total appropriations to Medicaid automatically results in lower reimbursement for services to providers is false. The Legislature does not set specific rates for reimbursement in the General Fund budget. A block of money, totaling $833 million, is appropriated as a pool to the Department of Health and Human Services. DHHS uses that money to fund the state’s portion of Medicaid expenses. That total amount needed to provide those services is based on a forecast that projects the total needs of the program during the coming two year budget. Appropriations are not made to a specific provider type or service, but rather to the entire budget program as a whole.
How the pool of money in the Medicaid budget is spent is a product of three factors. First are the provider reimbursements, which is the actual fee schedule for specific services to Medicaid patients by physicians, disability service providers, nursing homes, and other Medicaid service providers. There fees are determined by complicated rate studies which must be approved at the federal level by the Center for Medicaid Services. The federal government has extensive oversight over these rate schedules, since a percentage of the total reimbursement is paid for by the federal government. The federal share is determined by a factor known as the FMAP.
Medicaid is an entitlement program driven primarily by the other two factors that determine how the total appropriation is spent: enrollment and utilization. Enrollment refers to the number of people who participate in the Medicaid program in Nebraska. Nebraska has experienced steady to flat growth in enrollment in recent years. The third component of the equation is the utilization factor, which is the total costs to the state per enrolled Medicaid patient.
Thus, Medicaid does not operate from a fixed budget. It is a dynamic interaction of all three factors. Throughout the budget process, I have been carefully examining the total needs of the Medicaid program as a member of the Appropriations Committee. This has included discussion with DHHS CEO Courtney Phillips and Medicaid Director Calder Lynch. Through careful management and responsible budgeting on their part, they are able to successfully manage the Medicaid program with the $833 million proposed by the governor and ultimately sustained by the legislature this week. Their management approach to make better use of every state dollar is exactly the kind of process improvement that reduces excess and waste in government, while still meeting the obligations to our most vulnerable citizens.
Careful, thoughtful, and evidence based analysis is critical to all spending decisions. While political rhetoric makes for interesting headlines, prompts social media action alerts, and motivates voters to engage, if it is not accurate it complicates productive discussion and grinds effective government to a halt. To make the most responsible decisions for all Nebraskans, both those dependent on state programs and those paying taxes, I must actively seek and operate from accurate data and information. I encourage citizens to aggressively question information as well.
As is common in the closing weeks of a legislative session, a number of contentious issues have been discussed during floor debate. Fiscal issues like tax reform, levy authorities, bond priorities, and state spending in the budget draw sharp distinctions between political philosophies and, more commonly, rural and urban differences. Topics of a social nature, including eliminating mandatory minimum sentences, felon voting, prioritizing funding for comprehensive women’s healthcare, and voter identification issues demonstrate the differences in perspective among senators.
With so many complex and often emotionally charged topics debated and voted on in such a compact period of time at the end, coalitions and votes on one bill unfortunately bleed over and influence others. This is an unfortunate reality of the political process.
Understanding the entire scope of an issue is critical to productive dialogue and good policy. In an era of social media and “action alert” email blasts, special interest groups can quickly distribute talking points and political spin to voters and the media. In my experience as a state senator, I have seen many issues intentionally obscured by misinformation spread to generate opposition. I encourage all voters to thoroughly explore and understand issues of interest to them, especially before just accepting and perpetuating interest group talking points.
Many of the topics that have generated the most debate this session are complex and have significant historical context. Changes to tax policy, whether it be who pays property taxes, how property is valued, exemptions and credits applied to income tax, or even sales tax rates impact every Nebraskan in a different way. Changes in funding to a state program will have different results in each community. Seemingly straightforward topics like internet sales tax collection and craft beer distribution are complicated by interaction between federal law, state statute, and agency regulation. Unfortunately, much of the discussion on these topics resembles a Sunday morning talk show, with whoever shouts the loudest and the longest ending up triumphant.
I am very disappointed that tax relief will not happen again this session. The voices of hard working Nebraskans were drowned out by special interests serving their own needs. Despite a myriad of proposals put forth and a comprehensive package advanced to the floor by the Revenue Committee, lobbyists crying “it is not enough” and protecting their vested special interests made sure Nebraska ag land owners, working families, and business owners received nothing.
The biennial budget passed and sent to Governor Ricketts depends on an accounting gimmick and an unsustainable use of one time dollars to balance the state budget. Advanced over the objections of several Appropriations Committee members and a significant number of senators in the Legislature, the budget as passed puts the state on fiscally shaky ground if ambitious projections for revenue growth are not met in the short term. Long term, the stability of the budget will likely require even deeper cuts or tax increases in the next biennium. If revenues continue to lag, it is likely a special session will be required to make the spending decisions the majority of senators failed to make now.
As the session moves into its last full week, the final issues with support of a two-thirds majority of senators to move beyond cloture will be discussed and voted upon. Chief among them will be addressing any line-item vetoes by the Governor to the state budget. A vote of 30 of the 49 senators will be required to override any spending reductions made by the Governor. Pay close attention, as the results of those final votes will determine the trajectory of the State of Nebraska for the years ahead.