Two weeks ago, the legislature passed a budget, and sent it to the governor. At that time, I had several concerns about the budget as passed, and spending in general.
General fund appropriations have increased at an average rate of 5.3% per year during the four fiscal years ending June 2013 to June 2017. During that same time however, our state’s population grew less than 1% per year, and the Consumer Price Index increased at an annual rate of 1.2%. So our state’s spending has been growing at more than twice the rate of population increase and inflation combined.
And now, we’ve encountered a revenue shortfall. My concern is that with the state of our agricultural economy, this revenue shortfall may not improve anytime soon.
To pass a balanced budget, while not raising taxes, several steps were taken. The cash reserve, or rainy day fund, which only a few years ago was over $700 million, will be drawn down to roughly $370 million; over $200 million was raised by one time transfers from various cash funds; our general fund reserve, previously at 3%, was lowered to 2 ½%; and various spending reductions were instated. But even with these reductions, state spending will again increase in the upcoming fiscal year and beyond, albeit at a lower rate.
Faced with this, the governor vetoed roughly $56 million from the budget as passed, returning the general fund reserve to 3% and reversing a transfer from the Roads Operations Cash Fund.
Last week, several senators offered motions to override many of the governor’s vetoes. I voted against these override motions. I made my decision out of concern over spending in general, but also after examining the pattern of spending relative to each category vetoed by the governor.
Specifically, I compared the FY ’15-’16 appropriations to the FY ’17-’18 appropriations after the governor’s veto. In other words, I asked “what is the two year spending trajectory of these programs even as reduced by the governor’s veto. In the case of probation general fund appropriations, for instance, even after the veto it would be up 28.23% from where it was two years ago. Child Welfare would be increased by 16.5%, State Court Operations by 13.51%, Medicaid by 4.3%, Behavioral Health by 4.07%, Developmental Disability by 2.52%, and the University by 1.19%.
So over a two year period (and in most cases over a one year period from FY ’16-’17 to FY ’17-’18), the vetoes are not truly cuts to these programs. Instead, they simply reduce the increases and flatten the trajectory of general fund increases to a more sustainable level. As a result, I felt that sustaining the governor’s vetoes was consistent with the obligation of being a good steward of taxpayer’s dollars.
A number of large proposals have come before the Legislature in the last two weeks. Certainly the budget has been, and will continue to be, the major defining issue of the session. LB 457, my bill which would have brought voluntary termination agreements with school districts back inside of the levy lid and budget limit was amended into LB 512. That bill passed to final reading with an amendment which, while not bringing voluntary termination agreement spending entirely back inside the lid as we had originally envisioned, still substantially reduces the amount of monies for such agreements which can come from outside the lid, thanks to a compromise. While not ideal, this is a step forward and signals that the legislature is serious about working to reduce local spending as part of the larger effort to bring meaningful tax relief to all Nebraskans.
Another key proposal debated last week was the governor’s LB 461, which was billed as comprehensive tax relief. Because LB 461 prioritized income tax relief over property tax relief, I could not support it in its current form. As I told my colleagues, I believe that LB 461 would add to the imbalance in our tax structure, and would eventually increase our reliance on property taxes in Nebraska. We simply cannot ignore the crisis of property taxes which is happening all across our state. There are farmers who are on the verge of bankruptcy because of high property taxes; there are young people putting off the purchase of their first home because property taxes will push their monthly payment out of their budget; there are older Nebraskans on fixed incomes who can no longer afford to make the property tax payments on the homes they paid off decades ago. It is because of this that I will continue to advocate for tax relief, but only if it includes substantial property tax relief.
This week, we will continue to debate the budget. Currently, our budget increases overall spending by 1% from the current biennium. To do so, we are reducing the rainy day fund below $400 million, and doing a one-time sweep from various cash funds of state agencies and programs. I am concerned about the sustainability of such an approach, and I also am concerned that revenue projections going forward are too optimistic. As a result, I will support additional responsible spending reductions.
The budget has dominated the atmosphere in the Legislature the past two weeks, and as the budget discussions go on, I will continue to keep property tax relief as my number one priority. I maintain that to attain the substantial and significant property tax relief Nebraskans deserve, we must replace some property tax revenue with other sources, and we must also reduce spending. Last week in the Legislature, I had an opportunity to discuss both approaches.
Nebraska law limits the maximum property tax levy a school district can impose, and it limits the growth of school budgets, both with some exceptions. One such exception is for money used in voluntary separation agreements with certificated employees. These agreements are used by school districts to encourage employees to retire by offering them buyouts. My LB 457, merged into LB 512, was an attempt to put the funding of those deals back within the levy and budget growth limits, like almost all other school district spending.
LB 457 would still allow the use of these agreements, but we owe it to the taxpayer to require such agreements to be paid for within the tax levy and budget restrictions. To those schools impacted, I maintain that a district would have to either reprioritize its spending or take that increase in spending to an override vote of the people. The Legislature debated the issue twice in recent weeks, and debate was heated both times. I offered an amendment, which was adopted 33-0, to give districts three years to comply with the bill.
Last Tuesday, as the day turned into evening, Omaha Senator Burke Harr threatened a filibuster of the bill. Several senators were absent at that time, so we didn’t have enough votes (33) to withstand a filibuster, and had to agree to an amendment by Senator Harr which would still allow these agreements to be utilized outside of the tax levy lid and budget limit, but with some restrictions. In criticizing this compromise, I asked if it made sense to require money spent to improve education for our children to be within the levy limit, while allowing funding for retirement agreements to be unlimited.
The same day, we discussed LB 640, a bill to limit school funding derived from property taxes. Property Tax Credit Fund dollars were to fund this. I offered an amendment to expand the sales tax base, and eliminate a couple of income tax exclusions rarely used by a handful of Nebraskans, and use those funds to replenish the Property Tax Credit Fund. We began debate on my amendment, but didn’t get a chance to vote on it or the bill itself, when the time limit of three hours expired. LB 640 may or may not be debated again.
Recently, the Revenue Committee announced its plan for comprehensive tax reform for Nebraskans. While it does provide the income tax relief which some had promised, I believe that it falls short in delivering the property tax relief which Nebraskans desperately need. I have nothing against income tax reform, but it must be delivered hand-in-hand with comprehensive property tax reform. There are no Nebraskans who are facing a choice to close their businesses, sell their belongings, or give up land which has been in their family for generations as a result of the burden of income taxes. But there are farmers, ranchers, and others among our friends and neighbors who are facing those exact choices because they cannot afford to keep paying their property tax bill when it is larger than their income for the year. The sole provision for property tax reform which the Revenue Committee is advancing is LB338, which is a well-intentioned take on the issue. However, my concern is that LB338 won’t provide the degree of relief that is needed. That bill would value land using a capitalization rate – that is, it would assume that the revenue which a piece of land can generate is based on a percentage of the market value of the land. My concern is that, no matter how the capitalization rate is set, this proposal will not give long-term relief.
I will continue to work with many of my fellow senators who were sent here with an explicit mandate to give real property tax relief to all Nebraskans – to those of us in rural areas, and to our friends in the towns and cities. Because if property tax relief lifts off of some, while leaving others struggling, it will only be the beginning of a back-and-forth of each group sending senators to Lincoln to shift the property tax burden back onto someone else. Nebraska needs to be a state where people come when they are young and starting their careers, where they come in middle age to raise a family, and where they come to retire – and to make each of those choices without hesitation that they won’t be able to continue to live in their own home or work their own farm because they are forced to pay substantial rent to the government to keep their own land.
This week featured a big change in tempo at the Nebraska Legislature. Since January, we have had debate on the floor of the body every morning until around noon, and then committees have met in the afternoon (sometimes late into the evening). By the end of last week, every bill introduced this year had received a public hearing, a requirement of our one-house legislature to ensure that the people of the state have had the opportunity to voice their thoughts on every bill. That requirement being satisfied, the body moved into all-day debate, with only a break around noon for lunch. This will be our format until the last day of session, which is June 2nd.
The previous week, a bill by Senator Williams of Gothenburg easily advanced through the first of three rounds of debate. LB 518 would adopt the Rural Workforce Housing Investment Act, and use existing funds from the largely under-utilized Affordable Housing Trust Fund, and create grants to encourage the building of new workforce housing in rural areas. The issue of available housing in Nebraska is well-known to any rural senator. Without homes to move into, new people cannot move into a community; without new people, businesses cannot expand; without expanding businesses, a community cannot grow. It is a cycle which is holding back the massive potential which exists in Nebraska. I believe that this bill will help to break that cycle.
I introduced LB 256 this session as my own proposal to address workforce housing issues in rural areas. However, as that bill was not prioritized, and there are so many bills for the body still to address this session, it is unlikely to be heard in full debate until 2018. Because of this, and because I believe that addressing the workforce housing shortage is one of the most important things we can do to unleash the great potential of the great state of Nebraska, I signed on to Senator Williams’ bill as a co-sponsor. Fixing this issue is something everything can agree on, regardless of their political ideology, and the fact that the bill was advanced on a vote of 41 to 0 on its first vote attests to that.
If you’re reading this on Friday, I’d like to start by wishing you and your family and friends a very happy, and a very safe, St. Patrick’s Day.
This past weekend, I participated in a town hall in Albion with Lieutenant Governor Mike Foley and Attorney General Doug Peterson, and a representative of the Nebraska Department of Insurance. It was great to hear the voices of those of you who came out to visit with us, and I look forward to visiting with many more of you in the coming months and years in town halls across the 41st District.
Last week, I prioritized LB 265, a bill by Senator Friesen of Henderson, which would set a minimum dollar amount of state aid per student for every Nebraska child, beginning at $1,500 for 2018 and eventually raising it to $5,500 by 2022. By providing this state aid to each and every school district in Nebraska, we can untie the hands of school districts across the state who have no choice but to pay for the bulk of their expenses through property taxes. Additionally, as part of a larger package of bills, we can help to immediately give Nebraskans the real property tax reform they are demanding.
Only a few weeks remain for the legislature to pass a budget for the next two years. This process is never easy, and is no more so in a year with substantial revenue shortfalls. Cuts will have to be made to some programs, and emergency funds may have to be tapped into. I have been watching, and will continue to watch, the process as it plays out in the appropriations and revenue committees and elsewhere, and when proposals come to debate on the floor of the legislature, I will do everything I can to protect the interests of rural Nebraska and the people of District 41. No one comes through a tough budget year untouched, but the voices of Nebraskans who are already struggling under a heavy burden need to be heard in the Legislature, so that more financial hardship is not placed on them because of the voices of special interests.
As always, you can reach my office at (402) 471-2631. I look forward to hearing from you!
Last week, I had the honor of participating in a Tele-Town Hall with, I am told, over ten thousand Nebraskans from across the state. On the call that night, I heard from farmers and urban homeowners alike, all of them concerned that the burden of property taxes in Nebraska is simply too high. In a survey conducted during the call, nearly 84% of callers said that property taxes are their #1 priority in terms of lowering taxes in Nebraska. I will readily admit that this poll was taken on a town hall with the stated purpose of discussing property tax relief, but you can still extrapolate this data to mean that over eight thousand Nebraskans took time out of their busy Tuesday evenings, to participate in a town hall because they feel the weight of property taxes looming over their families.
In the middle of last week, my two major property tax relief bills were heard in the Revenue Committee of the Legislature. Dozens of Nebraskans stayed past 8 PM, some of whom had driven four hours or more, and testified in support of property tax reform as a whole as well as in support of both of my bills. There were also Nebraskans who testified with concerns on the bills, and I am always grateful to hear the perspectives of the people whom we represent at the legislature. I can understand not wanting to lose sales tax exemptions after so many years, but the fact of the matter is that – as many proponents testified – America’s economy has been transitioning over the last several decades from manufacturing-based to service-based. In 2017, it makes less sense than ever to leave so many services exempt from taxes. And in a state in which our residents are paying two and a half times the amount of property taxes as they are paying in state sales tax, it makes less sense not to use revenue from an expanded sales tax base to offset the burden of property taxes.
That is precisely what LB 312 and 313 do. There are those in the public sphere, and some who testified at the hearings, attacking my bills as a tax increase, or speculating that the revenue generated by a broaden sales tax base would go to offset the state budget deficit. No Legislature has the ability to write statute which will tie the hands of a future legislative session. But as I clarified during the hearing, the intent of my two bills is to direct all revenue first to offset the greater percentage of their take-home pay which the less fortunate spend on purchases of goods and services, and then to apply all remaining funds to go back, dollar-for-dollar to each and every Nebraska property tax payer. As always, you can reach my office at (402) 471-2631. I look forward to hearing from you!
Although at times it has seemed, over the past two weeks, that the work of the legislature has not moved very quickly, there has been a flurry of activity outside of the floor debate every morning. Every working day at 1:30 PM, there are committee hearings that run for several hours – sometimes very late into the night. By the time you read this, all but two of my bills will have been heard in committee. On Tuesday the 31st, we had a very busy day, with three different bills being heard in three different committees! I was pleased to see that few of my bills received much opposition, and even then, testifiers described themselves as being in opposition only mildly. My staff and I worked hard for the last few months to ensure that, as we moved forward with proposed legislation, we contacted groups representing Nebraskans who might have an interest in them, and started the process of working through objections and concerns.
I believe that LB 256, to adopt the Vacant Property Registration Act, will give our small communities facing workforce housing shortages an important additional tool in their toolbelts to address that critical issue. LB 418 is a standard annual bill to keep Nebraska in compliance with federal highway regulations and ensure that we are still eligible for federal funds. A number of public power entities came to me with concerns regarding physical security and cybersecurity information critical to protecting our infrastructure, which led to the introduction of LB 494, which would exempt from public records requests some information with the potential to cause harm if used by bad actors. My office has been working with energy providers and press groups to ensure that information which the public deserves to know about their public entities is not hidden, while still keeping Nebraskans safe. LB 457 would place voluntary early termination agreements between teachers and school boards back within levy limits. Finally, LB 456 would protect Nebraskans with disabilities from being discriminated against in custody, child protection, and adoption decisions: people with disabilities can be good parents and bad parents as often as the rest of us, and it is important to ensure that disability alone is not used as a reason to prevent children from knowing all of the benefits of growing up in a loving family.
My last two bills, LB 312 and 313, which will provide much-needed property tax reform to Nebraskans across the state, are scheduled for hearings on the morning of March 1st.
As always, you can reach my office at (402) 471-2631. I look forward to hearing from you!
The first ten days of the legislative session is the only time when new bills can be introduced in the Nebraska Legislature. During this time, I introduced seven bills, but two of them will probably be of the greatest interest to the people of the 41st District, and will probably create the most controversy, as well. They are LB 312 and LB 313. These two bills together work to provide real property tax relief to hard-working Nebraskans, in conjunction with proposals by other senators this year. I want the people of the 41st district to understand that LB 313 and LB 312 represent months of hard work by many people to ensure that property taxpayers all over Nebraska – on our farms, in our cities, and in our rural communities – receive the property tax relief they deserve. Both bills will create a new fund for property tax relief which will distribute property tax credit refunds back on a dollar-for-dollar basis to all property taxpayers. LB 312 does this by removing decades’ worth of exemptions carved into Nebraska sales taxes by special interests, and LB 313 does this by moving the sales tax rate up by one percent. Both bills then direct all new additional money raised from sales taxes first to raise the state earned income tax credit, thereby paying back the least fortunate among us who spend the greatest proportion of their money on purchased items, and then directing the entire remainder of the money to property tax credits.
In addition to those two bills, I have introduced a bill to ensure that parents with disabilities are not discriminated against in custody and adoption decisions; a bill to allow our local communities to enact vacant property registration ordinances; a bill to keep Nebraska’s roads in compliance with federal highway regulations; and a bill to help protect physical security and cyber security for our energy infrastructure. If you’d like to find out more about these or any bills, simply go to www.nebraskalegislature.com and click on “search bills.”
As always, you can reach my office at (402) 471-2631. I look forward to hearing from you!
It was definitely an interesting first week at the Nebraska Legislature, not only for those of us in the freshman class, but even for those who have been in and around the legislature for decades. Much of Wednesday through Friday in the first week of 2017 was the swearing in of new and re-elected senators, the election of Senator Jim Scheer of Norfolk to Speaker of the Legislature, committee assignments, and the introduction of some bills, but there was much speculation, accusation, and lamentation surrounding the election of chairs and the assignment of committees.
Some folks have labeled what happened an “ideological shift.” Since the imposition of term limits, every election year changes the membership of the Unicameral by 25 to 35 percent. Just as there have never been two people with the same views on every single issue, there has never been a senator replaced by someone with the exact same ideology. Regardless of the degree of the shift, perceived or otherwise, the goal of the Legislature must always be to make sound policy for our state, and to put forth the best effort by each of us to work in the interest of the roughly 39,000 men and women we each represent, and the nearly 1.9 million citizens we collectively speak for. I will always do my best to represent the 41st district of Nebraska as best I can.
In the first week, I received positions on two committees: Transportation and Telecommunications, and on Government, Military, and Veterans Affairs. You can find the areas of responsibility for both of my committees, as well as each of the other committees in the Legislature, at nebraskalegislature.gov/committees.
By the 18th of this month –the last day to introduce new bills– I intend to have introduced 2-3 bills addressing property taxes, along with a bill addressing the housing shortage in many parts of Nebraska.
Additionally, my staff and I were assigned an office during the first week, and we now have a phone number and an office to call home this year. You can reach us at (402)471-2631, and if you’re ever in Lincoln, feel free to stop by our office in room 1120. It is on the south side of the building, just west of the central hallway.
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