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The Nebraska Economic Development Task Force was created this year with the passage of Legislative Bill 641 to examine the effectiveness of economic development programs and to look at alternatives. Due to my position as Education Committee chairman, I am appointed as one of its 10 members.
So far we have met every month, requiring a trip to Lincoln. Originally, the subject was geared to analyzing what state and local economic development programs were effective, weighing the cost to the taxpayer versus the economic activity created.
The topic of late has turned to tax increment financing, a program that has legislative oversight by the Urban Affairs Committee. It was created by ballot approval of citizens, adding a new section to our State Constitution, Article VIII-Section 12. TIF is intended to create an incentive to transfer existing economic growth from the outer edges of a community to redevelopment in blighted and substandard older areas. It was never intended to become a tool for communities to use to compete with other communities for normal regional development growth; and it was never intended to be used as a cure-all for normal free-market irregularities such as a present perceived shortage of workforce housing.
This year I led a successful filibuster of LB496 — legislation that would have added private construction cost of projects (outside of Omaha and Lincoln) to the total cost property tax dollars could be used for to finance TIF. This was a major change to the present belief that TIF dollars are still tax dollars and should be used for public purpose: Limited to the cost of removal of blighted structures and replacement of older public infrastructure — streets and public utilities. The false perception during debate on the bill was that TIF was not being used for housing. The most recent TIF report by the Department of Revenue showed $557 million of statewide residential property value involved in TIF projects.
Most of those residential projects, due to being limited to public infrastructure cost, run their course on average much less than the allowable 15 years, thus returning those tax dollars back into the communities’ tax base sooner rather than later. By adding construction cost to the equation, all residential TIFs would run the full 15 years. The question also arises: Why would any contractor build a residence without TIF? It would soon become apparent that to compete, TIF would be a necessary part of the projects’ financing. Last year, outside of Douglas and Lancaster counties, Nebraska had $667 million in residential construction growth; considering the vast majority of that growth was in the city limits of communities, it is not hard to imagine the hit our state’s property tax base could take if LB 496 would pass. Last year, residential TIF had a $12 million cost; that could easily double in a few years.
In Lincoln County, we have an odd array of economic indicators. Low unemployment but, at the same time, loss of population is one. How can there be a shortage of housing when we have fewer people?
Is the cost of housing the problem, or is the cost of owning housing the culprit? I go back to high property taxes as a source for part of the housing situation. The mere fact that the supporters of LB 496 claim that property taxes are such a burden that the diversion of a homeowner’s taxes to a contractor for 15 years is a deciding factor to build should give pause to all of us when we examine our property tax burden. For example, a family looking to buy a $200,000 home in North Platte would pay on a 4 percent interest, 30-year mortgage a reasonable $955 loan payment; but when you throw into escrow an additional $100 for insurance and $350 for property taxes, a monthly payment of $1,405 can deter home ownership. So I continue to work for property-tax relief for all and fight against answers that only profit special interests.
As a statewide policy maker, I have to take into consideration unintended consequences of legislation. Often when you try to fix a perceived short-term economic bottleneck, you end up breaking the bottle.
Contact Sen. Mike Groene: firstname.lastname@example.org or 402-471-2729.
Why are Nebraska’s property taxes the 12th highest per-capita in the nation? It is how we fund public education.
In 1990, the Legislature over Governor Orr’s veto passed LB1059 “the Tax Equity Educational Opportunity Support Act”. The legislation was enacted to correct, at that time, the over reliance on property taxes (70%) to fund education. A goal was to fund a minimum of 45% of the total state and local cost of education with income and sales tax increases. To do so, sales tax rates were raised by 25% and income tax rates 17.5%. The mechanism used to assure all districts received state aid was to guarantee that a minimum of 20% of the income taxes paid by the citizens in their districts would be returned to them in aid. The promise made to the taxpayers was that their property taxes would decrease proportionally to the increase in their sales and income taxes.
By 1996-97 the Legislature broke their promise by enacting LB1050 and 806 which eliminated the guarantee of a state foundation aid of 20% income tax credit and eliminated the goal of the State’s share of funding at 45%. Those changes returned property taxes collected as the first source of funding for schools and returned state aid as a source to fill in the remainder. Also in 1996 they enacted LB1114 which established levy lids that promised local property taxes would be controlled by enacting lids on local government’s levy authority; schools were limited to 1.00. As we all know now, they did not consider the rapidly rising property valuations over the last 20 years which have driven up property tax revenues.
The only promise kept by (at that time non-term limited) Legislature was to raise your taxes.
Where are we now after 37 years of broken promises? According to the Census Bureau, Nebraska is 49th in the nation in per-cent of school funding that comes from the state and 2nd in the nation as to funding from property taxes; according to the “Tax Foundation”, the latest 2014 study has us 7th highest in the nation property tax burden on homeowners. Property taxes account for 65% of school funding. Out of a total of 245 school districts, 178 districts receive no state equalization aid; and so much for the promise that the state would cover 45% of state and local tax support for individual districts, this year only 13 districts received 45% or more of their funding from the State.
Since 2015 we have made small steps to keep past promises. In 2016, the Education Committee and Legislature enacted LB1067 that reinstated a small portion of the guaranteed income tax credit (2.23%). Now at least every school district receives a very small amount of state aid; prior to that, 81 rural school’s districts received zero dollars in aid through the TEEOSA formula. That year we also passed LB959 which incorporated my LB444 into its language, which eliminated the mandate that schools maintain a minimum tax levy to receive most of their state aid thus allowing fiscally conscious school boards a little wiggle room to control local property tax rates.
I give you this history of how state government unjustly funds public education on the backs of property tax payers in preparation for the debate on a petition effort that is in the works. It is commonly rumored to be called the 50% school general fund property tax/income tax credit initiative. It will give all
property tax payers in Nebraska who file a state income taxes a 50% refundable income tax credit on the amount they have paid to school districts for their general fund levy.
Our State constitution mandates that the state “shall provide for free instruction in our common schools”. Since it is obvious that past and present state officials have not fulfilled that state duty, it may be time for the second house of the legislature do so through their constitutional right to enact laws through the petition/initiative process. You will hear scare tactics from the opposition to the petition; ignore them and sign the petition. It is time for the taxpayers to send a message to state government.
I thought you might want to see the facts behind my positions on tax policy.
When talking tax policy in Nebraska, we refer to the three legged stool—taxes balanced between income, sales, and property taxes. Presently we are out of WAY OUT of balance. Last year, Nebraskans paid in billions: $8.9 in state and local taxes, $3.9 (43.8%) in property, $2.55 (28.7%) income, and $2.45 (27.5%) in sales and miscellaneous taxes. In Lincoln County, the inequity is even more dramatic. Last year, Lincoln County’s residents paid $71.3 million (51.5%) in property taxes, $31.7 (23%) million state income taxes, and approximately $35 (25.4%) million in sales taxes. If it seems to you that the proportion of your tax burden leans heavily to property taxes, the evidence shows you are correct in your belief. The easy political answer is to cut government spending. Locally, it is up to you to run for office or ask the right questions of candidates before you support them. On the state level, it is up to me to support policies that address the inequity in tax policy and to make sure the state does not pass down costly mandates to local government.
Our State’s property tax inequity is caused mainly by how we fund our public schools. Schools take well over half of your property taxes. As Education Committee Chairman, my focus has been to address the State Aid formula’s (TEEOSA) heavy reliance on property taxes. Last year I introduced LB640, which has made it through committee and is on general file but has strong opposition from senators representing some urban school districts that now receive the largest benefits from the status quo. With Nebraska’s unique one house Unicameral form of state government, the citizens are the second house and it may be time for them to take the issue into their own hands with a petition drive to put property tax equity on the 2018 ballot.
I would eventually like to see an individual income tax cut in Nebraska and to make Nebraska’s businesses competitive, I would prefer to eliminate many of the present economic tax incentives that go mostly to large corporations and replace them with the elimination of our State’s corporate income tax. But this is not the time for income tax cuts. It is our burdensome property tax structure that is driving retirees from our state, harming the rural economy, and hurting our housing markets. Like it or not, the property tax fix will have to come with a rebalancing of the three legged stool.
Monday, the County Commissioners set your tax rates for next year. As a local taxpayer it is good to see that many of the citizens who sit on local elected boards are trying to hold down the cost of government. The County Commissioners again lowered the County’s tax levy and only increased spending by a minimal amount. We all need to be reminded that although the County sends out your tax statements, they only receive 18% of the total property tax revenue. The local Ag Society (county fair) cut their tax rate and dollars nearly in half after doubling it for a year for a one time project. Mid-Plains Community College not only lowered their levy, they actually are taking less dollars ($16 million to $15.9). The villages of Sutherland and Wallace lowered their tax-rates and dollars. Thanks to the Airport Authority lowering their budget request, the city of North Platte was able to lower their levy slightly but due to reductions in sales tax revenues, they had to increase their dollars by $526,000. One way to lower your property taxes is to shop locally this holiday season and keep your sales taxes local.
The Twin Platte NRD reduced their tax-rate by 25% and reduced their dollars asked for by $632,000. Thank the irrigated farmer for paying his $10/acre occupation tax for lowering your NRD taxes. Now if the Twin Platte Board would agree to push for selling the NCORPE land, we could get those farmers a tax cut too.
Lincoln County’s total property taxes will go up. Individually it depends on where you live and if you were one of the unlucky ones who got a large valuation increase.
Recently, free speech issues have risen at the state and national levels. A University of Nebraska-Lincoln student representing “Turning Point”, a college campus-based organization touting support of free markets and limited government, set up a table on the student union commons area to recruit like-minded fellow students. She was asked to move out of the area by University staff and insulted by individuals with combative comments, vulgar gestures, and rude signage. Not all insults were hurled by fellow students as one would expect, but also by two University instructors. I am all for an exchange of ideas between college instructors and students framed by classroom debate. What made this situation different was the intimidation of this student by University employees in positions of power over her. I do not believe such behavior should be tolerated by government employees at the University of Nebraska. They should have been fired.
This past Sunday, many professional athletes used the playing of our National Anthem as an opportunity to make a political statement by kneeling or locking arms. Their behavior was baffling, why would you choose to insult our flag? It is the very symbol that flies above us representing the rights we share as Americans and waves to honor all who have fought to protect those rights. It is our Constitution and flag that has continued to drive our country in the direction of justice for all. What is more baffling is these athletes are living the American dream: most received a free college education, the opportunity to use their God-given talents, and to be rewarded handsomely for their efforts. Choosing to disrespect America on their time I can understand, but on that football field they are employees representing a professional organization. Since that is the case, don’t ask me what the score was. I won’t be watching.
A local amateur columnist recently distorted my views on using our State’s tax policy as a tool for economic development. He twisted a point I had made earlier (that those representing eastern Nebraska claimed an auto plant located in their corner of the state would be an economic boon for Nebraskans, but when rural Nebraska asks for property tax relief as an economic stimulus, we are met with a deaf ear) into a rant about housing and his dislike of my refusal to be bullied by the local chamber during legislative debate. He also inferred that government policy should be made by self-proclaimed experts in lieu of elected officials.
I freely admit, my election was not supported by the leadership of the local or State Chamber of Commerce. Why? Because I do not support incentive programs that harm local property and sales tax bases, I favor property tax relief for everyone over income tax cuts, I do not support government picking winners and losers through taxation policy, and I understand that Tax Increment Financing (TIF) is for urban renewal in such areas as between Cody Park and B Street.
The majority of the business community that did support my election were the owners of small businesses and individuals who work for a paycheck. I kept my word to them and in 2016, received a 100% approval rating by the National Federation of Independent Business.
This past session I continued to support small businesses by supporting a sales tax on internet purchases and I championed property tax relief efforts. I fought and defeated an attempt by a few (not all) bankers, wealthy investors, and corporate home builders to add residential construction cost to TIF because it was unfair to independent owners of rental housing properties–who with their own sweat and money, invest in and refurbish older homes–and was equally unfair to independent home builders who adequately supply the new homes needed in our community.
Don’t let the naysayers who deem themselves economic development experts mislead you on North Platte’s economic vigor. Even with the drag of a down agriculture economy and a high property tax burden, our housing and rental markets are strong, local retail developers continue to have faith in the community and are building new storefronts, and the labor market is robust–the railroad is hiring.
We introduced Legislative Resolution (LR) 130: an Education Committee study to examine issues related to the use and availability of substitute teachers.
Last year, Senator Erdman’s LB568 in the Education Committee and Senator Kolterman’s LB415 in the Retirement Committee brought to our attention policy issues concerning substitute teachers in our state’s public-schools.
When introducing LR130, I started with the premise that teachers want to teach and they take pride in their classroom results. They would prefer to be in the classroom! Therefore, the questions we posed were: 1) what can we do to maximize teachers’ time in the classroom? 2) What policies can we pursue to assure that there is smooth transition in the classroom from teacher to substitute? 3) Could policy changes help lower last year’s $35 million statewide cost for substitute teacher?
Believing that the real-life experiences of local school superintendents were the best source of background information, we sent out a questionnaire to all 244 school district superintendents. Response was good. At the hearing, we invited testimony from school organizations: Nebraska State Education Association (NSEA), Nebraska School Activities Association (NSAA), Educational Service Units (ESUs), Nebraska Association of School Boards (NASB), and the Department of Education (NDE).
When asked how many days teachers are absent from the classroom, the answer was on average 10.5 to 12 days. Considering many teachers prefer to be in their classrooms, the average was unexpectedly high. A school official who testified stated that the total days a public school student is taught by substitute teachers is equivalent to one of their 13 years in public school.
Life does happen and as expected, illness and the federal Family Medical Leave Act (FMLA) (up to 12 weeks) accounted for over 50% of the absence from the classroom.
Other major reasons were: continued education requirements for certified teachers for professional development and training for state mandates on assessments, curriculum, student testing, school safety, and standard reviews. Also attributed were new training requirements for numerous state edicts, as examples; suicide awareness, bullying prevention, date rape prevention, restraint and seclusion, and concussion protocol.
The trend towards teacher contracts allowing for personal days instead of strictly sick leave and family emergencies was also mentioned as a reason for increased teacher absences.
When asked if NSAA high school activities were a major factor for demand of substitute teachers, the answer was no: those events are mostly scheduled around school days. Some isolated rural districts were affected by travel time to events. Also mentioned were, an increase in junior high activities and all-day club activities of Future Farmers of America (FFA) and Future Business Leaders of America (FBLA).
We discovered that after allowing for the expected 5-6 days of illness and family leave, the question remained of how can we keep teachers in the classroom the other 5-6 days they are now absent? Scheduling training days by ESUs and the NDE during non-classroom times seems to be the quick answer. That answer may mean adding more non-classroom days to employee contracts or simply scheduling training during the summer interim. A consideration of moving away from the trend of giving paid personal days in contracts and instead returning to a policy of allowing for administrator approved paid absences may be another answer.
With that said, for the immediate future we still need to find ways to expand the pool of available substitute teachers. Most of the responders to our survey said allowing recently retired teachers the ability to substitute immediately would help immensely; the stickler is, the IRS requires a bona fide separation from like employment when retirement is drawn. State law defines separation for public school teachers as 180 days. NDE did attempt to address the problem this year by increasing the number of days a local substitute can teach from 45 to 90. To be a local substitute, one must have at least 60 credit hours of higher education including an hour of an approved human relations course. It was suggested that 120 days should be considered.
If you have inkling to teach, check with your school, you may qualify to substitute teach.
Now that the Legislature is not in session, we will attempt to explain the facts behind the happenings on some continuous legislation.
LB98 was stalled by filibuster this past session. It would have reset a sunset (cease to exist) date on a 3 cent property tax levy authority for over and fully appropriated Natural Resource Districts (NRDs) to pay for implementation of their required integrated management plans (IMPs). In 2004, the Legislature first gave the levy authority to the involved NRDs; it has since sunset and been reauthorized three more times and will sunset again next year.
We stood against LB98’s attempt to extend the sunset for 10 more years on the following rationale:
NRDs already have the taxing power to levy up to 4.5 cents and can, with a super majority board vote, override the levy by one cent for a total of 5.5 cents. There are 23 NRDs in the state whose boundaries are defined by the river basins their rainwater drains into: Platte, Republican, Loup, Niobrara, Elkhorn, Nemaha, Blue, and Missouri River systems. The State has designated 10 Districts as being over or fully appropriated on ground water usage within areas of their districts.
Taxpayers expect that when a sunset is in place there is reason that the tax should end. They also expect the tax dollars will be accounted for and used to accomplish the purpose intended. The NRDs knew that the levy would sunset and good management practices should have planned for that event. The bill had a hearing before the Revenue Committee, of which I am a member. It was obvious the plan was to keep a low profile; make it seem like the extension of the sunset was just standard procedure. A couple of senators started asking questions. We discovered that the law did not mandate that separate records be kept to show where the tax dollars were used to alleviate the district’s ground water problem; and in fact, we found that those tax dollars were just blended into their overall budget. Districts involved do have projects in place to alleviate the overuse of ground water; they just did not prove that the tax levy was necessary to accomplish the projects. Seven of the 10 districts involved levied a part of the 3 cents; only 2 of those have total levies that exceed their 5.5 common levy authority. The two districts with boundaries in Lincoln County: the over-appropriated Twin Platte and the fully-appropriated Middle Republican have total tax rates below their common levy authority.
Two overriding reasons why the sunset on the taxes should happen are:
With the event of the occupation tax, districts now have a mechanism to fund their IMPs and along with the gigantic increase in valuations, I could see no reason to extend the sunset date on the special NRD levy.
No matter that there is no need for the IMP tax, management of effected NRDs are lobbying hard to keep the taxing authority. The best I can surmise, is that they are like the reformed drunk: they do not need the booze, but they want the security of the jug of whiskey under the sink. What is interesting is that some of the management of the 13 NRDs that have no over or fully appropriated areas are badgering their state senators to support the sunset extension. Their involvement makes no sense unless someday they also would like to have a jug of whiskey under the sink (tax increase).
Property tax relief for all Nebraskans is needed; eliminating the NRD tax can send a message to all local governments: “it’s time to stop hiding spending behind valuation increases”. It’s time for them to lower tax-dollar asking not just their levy.
Please do not hesitate to contact our office, email@example.com or 402-471-2729, with any comments, questions, or concerns.
Why is a State Senator sometimes present for a vote on legislation, but does not vote?
Let me walk you through an actual bill: LB461 came out of the Revenue Committee; it is commonly known as the Governor’s and Revenue Committee Chairman’s “Comprehensive Income Tax and Property Tax Relief” effort. The original language of LB461 was “Correct references to a federal act in a revenue statute”, a normal cleanup bill to match changes in federal income tax law to Nebraska’s income tax policy. LB461 became what is referred to as a “committee shell bill”, where comprehensive legislation can be created. Related individual legislation introduced by senators are assigned to the committee and after a public hearing, can be amended into the shell bill in executive session (attended by the press but not the public). At least 3 bills (none of which were introduced by me) were amended into LB461 to create a comprehensive tax reform bill. It gets complicated, but other revisions are also made in committee to create the end product—changes that may not have had a public hearing. I do not disagree with the system; as Chairman of the Education Committee we used LB512 as the shell bill that became the Education Committee’s effort to create comprehensive education reform. But like all good policy intentions, it is only as good as the humans in charge; the committee process on creating shell bills can and has been abused.
Because I agreed with some but not all of the property tax reforms in LB461, I was one of the majority of the Revenue Committee members to advance the bill to General File. We needed to have a public debate on the floor of the legislature on tax policy and I wanted to be able to put emphasis on our burdensome property taxes. The overall bill I could not support; it was heavily weighted towards income tax cuts over property tax relief (10-1), and frankly my constituents have not asked me for income tax relief, their focus has been on burdensome property taxes.
The way the Unicameral works with its three stages of debate—general file, select file and final reading—it allows for the opportunity to amend a bill to refine the final product. I was amenable if the right corrective amendment came to the floor, but it was not going to happen. “The never in their lifetime” opponents of income tax cuts were filibustering the bill and we were never going to get to a good amended tax bill. So when after the six hours allowed for debate ended and the cloture vote was taken to proceed to vote on advancing LB461, I stayed neutral: present–not voting. Cloture takes a super majority of 33 votes; it failed 27 yes, 9 no and 13 present—not voting.
Casting a present—not voting vote is basically a soft no vote. It sends the message to the bill’s proponents that I may agree with you that we have an issue that needs to be addressed, but I do not agree with your solution. When asked by a reporter last year if we failed to accomplish all that needed to be done, my reply was, “Nebraska has existed for 150 years without the failed legislation, I believe it will make it through another year until we do it right.”
The debate on LB461 was another step in the stairs to reach property tax relief; we are building to a crescendo on the issue. My input is one of many trying to put together the right language for a petition initiative to allow citizens to directly address the property tax issue. So stay tuned.
I appreciate all of the positive feedback we have received on last week’s NCORPE/windmill column. No one is attacking the system of local government we have, including the Natural Resource Districts; what citizens have a right to do is question the decision that those elected bodies make and have the expectation that those they elect, with oversight of those local entities, do exactly that and if necessary, fix the issue with corrective legislation. It is called democracy in action.
Please do not hesitate to contact our office, firstname.lastname@example.org or 402-471-2729, with any comments, questions, or concerns.
A promise that I made to you when elected was to look after the best interest of Lincoln County concerning the creation by four area Natural Resource Districts and their interlocal agreement named N-CORPE. What many of us feared is coming to pass. Ground water levels around the mining operation of H2O in central Lincoln County has dropped as much as 29 feet since pumping began in early 2014. In perspective, it dropped a manageable 14 feet the previous 37 years.
This year I introduced LB 218, which would require the NRDs to be transparent on the effects of N-CORPE on our local groundwater levels and future management plans. It also defines and restricts future attempts by public or private entities from mining groundwater and removing it from its natural ecosystem and the bill would force the NRDs to sell the land while maintaining use of the groundwater allotments. While the bill has received support from the majority of individual farmers and urban citizens I have talked to, it has been vehemently opposed behind the scenes by NRD management employees, mostly from those NRDs whose boundaries do not lie in Lincoln County.
I have not received a satisfactory answer to my question, “Why do the taxpayers need to own 20,000 acres in N-CORPE?” Instead the NRDs are pursuing a scheme to pay for N-CORPE’s wasteful management by proposing to contract with a private company to put 140 windmills on public land. It seems they plan to do so by overriding Lincoln County’s local zoning control, and without the approval of its citizens.
On July 26, there will be an N-CORPE sponsored open meeting on the windmill proposal. In preparation, I have sent the following letter to the NRDs:
“I am requesting information to address concerns that the citizens of Legislative District 42 (Lincoln County) have brought to me about recent actions your NRD has participated in through its membership in the Nebraska Cooperative Republican Platte Enhancement Project (N-CORPE). The issue is your involvement in a contract with HDR to pursue an agreement with a private wind energy company to erect multiple electricity generating windmills on public property.
Answers to the following questions are needed to address the public’s concerns:
1) What statutory authority gives N-CORPE the right to proceed with this action? The language in the Interlocal Agreement does not state a purpose that would infer the establishment of a wind energy generation project.
2) How are your actions in accord with the State’s purpose for creating the existence of an NRD? What state statutes are you relying on for your individual NRD’s decision to pursue this action?
3) What legal procedure are you planning to use to allow industrial development in an area zoned agriculture by Lincoln County?
4) Has your NRD board taken a publicly recorded vote giving direction as to how your interlocal representatives shall vote on the windmill matter?
5) The Upper Republican and Lower Republican NRD’s boundaries do not include land in Lincoln County. What authority do you believe your NRD has in dictating zoning decisions to elected officials in Lincoln County? It becomes a greater concern for Lincoln County residents that 3 of the 4 N-CORPE board members do not reside in our county.
6) Since establishment of a wind generation area could be considered economic development by a public entity, will there be a public vote seeking approval?
7) HDR Inc. has been contracted to provide engineering support for the development of the “project.” Since N-CORPE exists to satisfy a state purpose, what funds are used for the payment of this contract?
In order for Lincoln County citizens, including their State Senator, to knowledgeably participate in discussions on the proposed windmill project during the public comment period on July 26, we would expect to have answers to these questions well before the meeting.
Sincerely, Sen. Groene”
Signs along Highway 23 say, “Keep our water in Lincoln County.” Local irrigation and livestock agriculture does exactly that. Likewise, Lincoln County citizens have the right to control decisions on zoning and what industries define their business culture. I urge you to show up and make your voice heard on July 26.
Please do not hesitate to contact our office, email@example.com or 402-471-2729, with any comments, questions or concerns.
We enjoyed seeing many of you while walking in the NEBRASKAland Parade Saturday. You might have missed it in the local press, but Senators Tom Brewer and Steve Erdman joined us in the parade to participate in the official kickoff of the 150 year statehood celebration. We all appreciated your shout outs of support and words of wisdom.
Last week, I focused on the State’s budget which begins July 1. I thought I might add a few more pertinent facts. Wages and benefits are the largest cost of most government operations. State employees agreed to a raise of 1% for 2018. The agreement was negotiated by the Nebraska Association of Public Employees and representatives of the State at the very start of the budget process through collective bargaining. It will affect almost all of the State’s employees including those in the Department of Roads and Health & Human Services, along with all other state agencies. Non-bargaining employees, including the staff of the elected Constitutional Officers (i.e. the Governor) and the Legislature will receive the same 1% raise. State Senators receive no pay raises; their pay is locked in at $12,000 annually by the State’s Constitution.
Higher education organizations bargained their own raises. The University of Nebraska increased wages an average of 1.75%, the increase is included in their overall budget request. The State Law Enforcement Bargaining Council (SLEBEC) negotiates for law enforcement employees and they reached a settlement averaging 2.3% for both years of the biennial budget.
In an effort to address our prison problems, Corrections Department employees will receive on average a 4.4% increase in salaries but increases will vary for specific classification pay lines which include correction officers, caseworkers, corporals, sergeants, mental health practitioners, nurses, and food service specialists. High employee turnover and a lack of experience were attributed to being reasons behind some of the recent inmate unrest at our prisons. Employee turnover is costly; we lose the investment we made in those officers’ training and increase our cost when we have to train new employees. Having employees with longevity on the job can go a long way in correcting our prison system unrest.
It is no surprise that employee health insurance cost jumped 5.75% for FY 2017-18. State employees have a very good health insurance plan and they are willing to forgo higher raise increases to keep it. State employees pay on average 20% of their health insurance premium. The cost of salary and benefit increases added $32.1 million to the budget. Overall, state employees need to be thanked for stepping forward by accepting lower wage increase and thus being part of the solution to our budget solution.
Senators are allowed to introduce Legislative Resolutions (LRs), which are recommendations to committee chairmen to do interim studies on issues, which in many cases lead to legislation. Due to limited staff and time, only a few of those resolutions can be investigated by each committee.
I introduced three LRs:
Legislative Resolution 130 (referred to Education Committee) – Examine issues related to the use of substitute teachers. This past session, the lack of an adequate number of available substitute teachers in rural Nebraska became an issue that was discussed. The Department of Education addressed some of the causes by easing requirements for substitute teachers, but the issue remains. LR130 will attempt to pinpoint causes and propose remedies.
Legislative Resolution 170 (referred to Education Committee) – Examine issues under the jurisdiction of the Education Committee. This is an open resolution that allows a Committee to investigate any subject that may show up on the public’s radar. I am leaning towards looking at the reasons for the growth in public education’s administration cost.
Legislative Resolution 237 (referred to Natural Resource Committee) – Examine all aspects and the history of the Nebraska Cooperative Republican Platte Enhancement (NCORPE) project. Committee Chairman Dan Hughes introduced a similar LR126. I plan on attending any hearings related to the issue.
This Friday, I will be in Lincoln for a briefing by the Department of Education to the Education Committee on the progress Nebraska has made to address the new federal “Every Student Succeeds Act” that replaced the former “No Child Left Behind” federal education program.
The State budget, with a .6% increase, reflects our State’s present financial situation. It’s been my experience that in private or government endeavors, when times are good we too often allow spending excesses and waste to remain in budgets. An economic downturn is the opportune time to examine costs associated with government programs.
-Public school spending will get a 2.3% increase and special education, 1%. As Education Committee Chairman, we protected the small amount of state aid funding that rural schools receive through the Income tax rebate portion of the state aid formula (TEEOSA). North Platte Public Schools fare better than most of the equalized districts; enrollment decreases have more to do with NPPS’s overall funding reduction than budget cuts. It has been disheartening to see that many larger school districts have used some of their increase in funding to give lucrative administrative pay raises instead of focusing on maintaining the quality of programs; senators have taken note of that occurrence.
-Public Welfare programs: Medicaid has had an average annual increase of 5.7% over the last 20 years. It will decrease by .8% this budget cycle. Child Welfare, historical 6.9% increase, 1.8% budget increase; Developmental disability aid, historical 7.5 % increase, budget cut of .9%; and Behavioral Health, historical 6.5 % increase, budget cut of 1.1%. The largest savings of $11 million will be from Health and Human Service’s plan to adopt the same policy that 44 other states already have, reimbursing hospitals at the lesser Medicaid rate in lieu of the higher Medicare payments for individuals who qualify for both. When historical data is taken into account the temporary 2 year budget cuts are reasonable.
-University of Nebraska (UN) and State Colleges: 2.6% historical annual increases, budget cut of .2%. Nebraska is third in the nation in per-capita tax dollar support of our higher education institutions; with that in mind, UN fared well this budget go-round.
-Correctional Services: 3% increase in its operating budget plus a transfer of $75.2 million from the cash reserves to address overcrowding and personnel shortages. With federal law suits looming, these expenditures are necessary.
Overall, I believe the budget is a reasonable response to the present shortfalls in revenues. The Governor and the Legislature worked in a manner that reflected a good interaction between the branches.
LB641 created the 10 member Nebraska Economic Development Task Force. The goal of Senator Watermeier, the sponsor, is to examine the effectiveness of existing programs and coordinate between committees any changes or creation of new programs. I agree with his premise that we show up in Lincoln every January with a multitude of proposed economic development ideas with no coordinated effort to refine the legislation into one cohesive bill. The task force seeks to have the input of seven committee chairmen. I sit on the panel as Education Chair.
This year, we introduced LB599: It would establish that development improvements on land of new infrastructures, redevelopment or new construction intended for business or housing purposes be considered business inventory until the property was occupied or sold. It is an attempt to alleviate burdensome property tax cost to developers who build speculative projects. The bill is still in committee and has the support of the Chamber of Commerce.
I bring this up to contrast my opposition to LB496, which would have added construction cost to Tax Increment Financing (TIF). Tax policy should be universal to all, it should not rely on arbitrary decisions by local elected officials as TIF is. Unlike LB496, LB599 would encourage development without damage to local property tax bases.
A local column writer recently inferred that if LB496 was enacted it would have helped reduce your property tax burden. The legislative proponents had the common sense not to make such a foolish claim. Taking normal housing growth off the tax rolls for 15 years will cause you to pay more in taxes. Someone has to support government operations and it will be you. Present TIF law at least attempts to divert those tax dollars to offset other public cost.
I stand proud of my efforts to defeat LB496 and will debate anyone on the why of it.
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