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On January 8th, we began this legislative session. At that time, Nebraskans expected two major issues would be addressed, the first being relief from the economic burden of Nebraska’s regressive property taxes, by far their number one grassroots issue. The second issue involves the passage of the ImagiNE Act, a new economic incentive law to replace the soon to be sunset Advantage Act, this being the biggest issue of the State Chamber of Commerce and the corporate business lobby. The previous year, a stalemate occurred between supporters of both initiatives and it became clear to all involved that both issues needed to be addressed and they needed to go forward together.
The property tax proposal was expected to add approximately $100 million per year to state aid to public schools, thus lowering local property taxes by a like amount reaching a total of $300 million by the third and final year (2022/23 school year) of LB1106’s implementation. Meanwhile, by its third year of existence, the new ImagiNE Act is estimated to add an additional $50 million to the Revenue Department’s already forecasted $180 million loss of the state’s tax-dollar revenue from the existing Advantage Act agreements.
Out there also are two costly public policy needs: prison overcrowding and voter-approved Medicaid expansion. A recent proposal by the Department of Corrections to lease a 1,200- to 1,800-bed facility is estimated to cost as much as $70 million annually. The Department of Health and Human Services has estimated that Medicaid expansion could add $62 million to the state budget by 2023.
All of this new state spending is expected to be paid for by a projected 4.5% annual historic revenue growth (approximately $225 million per year).
Three years from now, the estimated cost of the above proposals to the 2022-23 state budget would total $482 million. With revenues over the same period increasing $675 million, this is doable but leaves very little room for inflationary growth to the state’s spending.
On top of all the above, the Chancellor of the University of Nebraska Medical Center (UNMC) surprised the Legislature with a $300 million dollar request over 6 years (LB1084) to help attract to Omaha one of at least five Department of Defense pilot programs to increase the military’s hospital surge capacity under the National Disaster Medical System. This program was recently authorized in the National Defense Authorization Act (NDAA).
At the hearing on LB1084, the Revenue Committee was presented with a proposal to attract a $1.5 billion federal investment in the project, thousands of jobs for Omaha and $50 million in tax revenues for Nebraska. It was implied that without state financial participation it would not happen. I, like 31 other senators, signed on to the bill. Remember all of the above was pre-COVID-19.
I have since had a chance to read the NDAA legislation. None of the language in it or in any of the recent COVID-19 related bills indicates a state’s financial participation is a prerequisite of being chosen as a partner in one of the 5 projects. What the statute requires is the Department of Defense pick locations “…in the vicinity of major aeromedical and other transport hubs and logistics centers of the Department of Defense”. It is clear in the legislation that the military will be looking at multiple sites and the money will not be spent in one location.
If Omaha would happen to be chosen by the Department of Defense for a pilot project, it will be due to Offutt Air Force Base, its central location and the relationship Nebraska’s Governor and federal elected officials have with the President and his administration.
Presently there is an effort by some in the Legislature to reopen the grand bargain of passing, both the property tax relief and economic incentive legislation, instead attempting to create a compromised combined super bill that would include the annual $50 million for UNMC’s hospital surge capacity proposal. I will continue to keep my commitment to support the property tax and Imagine Act legislation as presently amended, but with the obvious decline in state tax revenues due to the government’s reaction to COVID-19, and the urgent need for funding of property tax relief and other pressing issues, I cannot support any legislation that makes major alterations to present language or includes a future commitment for funding we don’t have for a pie in the sky proposal.
Contact Sen. Mike Groene: email@example.com or 402-471-2729