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We in rural Nebraska, with an economy heavily dependent on agriculture and transportation, understood as early as two years ago that something was amiss in the state’s economy. Prices of farm commodities crashed, railroad shipments slowed down, energy exploration and infrastructure construction stagnated, and railroad and agriculture related businesses were laying off employees. Rural senators repeatedly told their colleagues of the coming slowdown. But yet, government spending did not slow down; the state budget was increased by 3.7% annually and local governments raised property tax revenues in the face of taxpayers’ concerns that lower family incomes would make them harder to pay.
Based on information supplied to them through the Legislative Fiscal Office and the Nebraska Revenue Department, the Nebraska Economic Forecasting Advisory Board recently revised their tax revenue forecast for the next biennium state budget down $910 million or 10% below the expected General Fund budget projections.
A few examples of cuts in state spending that may need to be made in order to eliminate the present (it could get larger) $910 million shortfall:
The state aid to Public Education (TEEOSA) is expected to increase 5.6% annually, totaling $109 million over the 2 year biennium
Medicaid: 5.5% increase totaling $96 million
State employee pay raises: 2.5% estimated increase totaling $53 million
Employee health insurance premiums: 10% increase totaling $35 million
Community colleges: 3.5% increase totaling $7.2 million
…and the University of Nebraska’s request for an increase of 4% in state funding, totaling $50 million (the State Higher Education Executive Officers Association [SHEEO] in its latest report already rates Nebraska as the fifth highest [$438] in per capita spending of all fifty states in tax support of its University System).
The list of other state programs that could also be affected by the budget shortfall includes special education, public assistance programs, juvenile justice reform, and basic government operations (utility bills, etc). The $404 million tax-relief expected by taxpayers from the Property Tax Credit Fund, an $11 million annual water sustainability fund allocation, and the need to actually increase spending on badly needed improvements to the State Corrections budget are also on the chopping block. In fact, if we froze the general fund budget at this year’s $4.41 billion, the savings would only amount to $594 million.
Believe it or not, with the scenario we are presently in, there are still special interest groups and some senators who think we can cut income taxes and increase economic development tax breaks for chosen individual businesses; there are also some who advocate raising taxes, and then there are those who believe a positive attitude will magically fix everything. I don’t belong to any of those three persuasions. We are going to have to slow down and even reverse government spending. Past efforts for property tax relief must be protected and we cannot raise tax rates on citizens. Expand the sales tax base? Maybe, if used to protect property tax relief. Government entities need to learn to live under the same economic realities as do those in the free market world.
One way to help keep your local economy strong during an economic turn down is for citizens to support their local retail businesses. The trend to buy products on-line is harming our state’s sales, income and property tax base, and most importantly, harming the job market in our local retail industry. It would help if we all reversed some of our on-line shopping habits by researching products online and then buying them locally. Cancelling a big city shopping trip can also help your gasoline budget. Just a thought, but I agree, you do have the freedom to spend your money where you wish.
In an earlier column I proudly informed you that my voting record on 9 issues generated for me the lowest rating by the State Chamber of Commerce, but recently my voting record on 6 issues garnered a 100% rating by members of the National Federation of Independent Businesses (small local business owners). That is a fact I am very proud of.
Please do not hesitate to contact my office firstname.lastname@example.org or 402-471-2729 with any comments, questions, or concerns.