I’m writing this week’s article from Madonna Rehabilitation Hospital in Lincoln as I recover my physical strength and stamina as part of recovery from a fall caused by medication side effects. I am progressing well and look forward to being back in the District soon. My recent experience has reminded me of the value of affordable, quality healthcare as a fundamental resource for our state, and especially rural communities. I have been fortunate throughout my journey to receive excellent care from the University of Nebraska Medical Center, Great Plains Health, and now Madonna. In addition to property tax relief, supporting rural healthcare and access to affordable insurance coverage are top priorities of mine.

This week, we received good news from the federal Centers for Medicare and Medicaid Services (CMS) that the state’s application resulting from LB1087 was accepted. As a reminder, LB1087 was passed by the Legislature in partnership with the Nebraska Hospital Association (NHA) and allowed for the collection of an assessment from hospitals that could be used as the state matching dollars to draw down more federal funds, which would then be redistributed to our hospitals. The application was filed on July 1, 2024, so benefits for Nebraska hospitals will be retroactive from that date. Nebraska hospitals should receive nearly $1 billion in benefits from the program. Big thank you to Governor Pillen, the NHA, and 44 of my colleagues who voted for the bill.

Growing rural Nebraska will depend upon keeping fundamental services available, which includes our hospitals, big and small.

I am mindful that our federal delegation has the tough job of cutting federal spending to close the budget deficit that has exploded over recent years. The future of the LB1087 program will depend on the results of the reconciliation bill in Congress. Nebraska has already felt the pressure of some of these cuts on its own budget, and I expect that the Legislature will be faced with more tough budget cuts this coming year. It will be critical for lawmakers and the administration to work together to prioritize how we spend the dollars we do have, and for our counterparts on the local level to hold down spending until more property tax relief can come at the state level.

It is important to remember that property values have risen faster than inflation; however, this does not automatically result in property tax increases. The ultimate tax will be determined after budgets are approved and tax requests are determined within the caps established by the Legislature in the 2024 special session. I expect mill levies to fall, and I hope property taxes will moderate.

Every tax cut must be offset with a corresponding spending cut. Anything else is simply a tax shift, where someone else picks up the tab for the other tax. The state budget is fully appropriated, so it would either take new revenue or decreases from another appropriation to fund new priorities. Tax shifts are not new, but they also don’t decrease the overall tax burden on Nebraskans. For example, over the last several decades, fewer dollars have been coming from the state to fund rural schools through TEEOSA, so the costs have been picked up by property tax payers. Now, the state is providing direct funding by offering $1,500 per student in foundation aid and has created a $1 billion education future fund to help with direct funding to schools, so there should be opportunities to reduce property tax askings. Conversely, the state is funding the continued step down of the state income tax, which means we are more dependent on other revenue sources, like sales taxes and fees, for state revenue.

Unless we expand the tax base, the state’s revenues will be limited to growth in the state’s economy that produces more state income and sales tax revenue. Attempts have been made to eliminate some sales tax exemptions on higher-end goods and services that don’t impact low-income earners and business inputs, but have fallen short of passage. Unfortunately, property taxes are often the first to be increased when revenues are short, simply because the state has fewer funds to offset local spending. This cannot continue. Less spending and growing more is the formula to greater prosperity.

I want you to know that I am remaining focused on how best to serve you and the issues important to you. I am grateful that we live in a time when technology makes it so easy to stay connected, and I am participating in as many calls and virtual meetings as possible between physical therapy. Please continue to reach out by phone at 402-471-2729 or by emailing me at mjacobson@leg.ne.gov.