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On Tuesday of this past week, Governor Pete Ricketts presented his State of the State Address to the Legislature, which outlines his budget recommendations for the next biennium. On Thursday, Supreme Court Chief Justice Michael Heavican presented the State of the Judiciary. He spoke about justice reinvestment, the role the courts play in that process, and the initiatives that have been implemented to increase access to our courts.
Although the state is strong and growing, Governor Ricketts acknowledged that our number one industry, agriculture, is struggling with low commodity prices. He relayed that when talking to Nebraskans, property tax relief is their number one priority. The governor’s proposal contains $51 million each year in direct property tax relief, accomplished by increasing the annual appropriation to the Property Tax Credit Fund to $275 million. Furthermore, at the request of the governor, Senator Brett Lindstrom introduced Legislative Bill (LB) 303, which creates a floor for the Property Tax Credit Fund, prohibiting the amount of property tax relief from going lower than $275 million.
Another recommendation from the governor for property tax relief would require a constitutional amendment (CA), which first must receive approval from the Legislature and then from the majority of voters. The proposal, introduced by Revenue Committee chair Senator Lou Ann Linehan, establishes a 3% cap on property taxes levied by local governments, such as schools, cities, and counties. The two exceptions would be for bond payments or if residents in a political subdivision voted for an increase at a special election.
Other senators are introducing alternative proposals for property tax relief. I will provide more information on this topic in a future newsletter, as tax relief will be one of the most important issues we deal with this year.
The governor’s budget proposal would allow retired military veterans to exclude 50% of their military retirement benefits from state income taxes. He noted that five of our surrounding six states do not tax veterans’ retirement benefits and wants to make Nebraska a more attractive state for veterans. Senator Tom Brewer introduced LB 153, the tax relief measure for veterans, at the request of the governor. I signed on as a co-sponsor of the legislation.
K-12 schools are fully funded under the Governor’s proposal. Higher education received increases to fully fund salary and health insurance. The governor also proposed the creation of a Nebraska Talent Scholarship Program. The $4,000 scholarships would assist the university, state colleges and community colleges attract more students in targeted programs, ranging from engineering to health care. Funding for approximately 2,000 scholarships is included in his budget recommendations.
The governor has proposed a capital construction project for two new high security housing units. This would increase capacity by up to 384 beds at the Lincoln Corrections Center and help ease the overcrowding in our prison system.
Even with the new initiatives, the budget proposed by the governor limits spending growth to 3.1 percent. A significant portion of the new spending is attributable to fully funding the school state aid formula and for implementing Medicaid expansion. The governor’s recommendations contain no tax increases.
Although the Legislature’s Planning Committee recommended increasing the state’s cash reserve to $700 – $800 million, the governor’s proposal reflects a balance of $348 million, after transferring approximately $50 million for the Capitol Construction project at the Department of Corrections.
Because there is some talk of eliminating or reforming business tax incentives, the governor informed senators of his thoughts on this subject. He emphasized that incentives are an important tool for attracting new investments and jobs, but hinted that he would support efforts to make incentives simpler, more transparent and accountable, and with a greater focus on higher paying jobs.
As the public hearing process gets underway, I encourage you to inform me of your thoughts on the legislation that has been introduced. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number at the Capitol is (402) 471-2801.