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Gov. pleads for lower taxes, less state spending

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BY NANCY HICKS / Lincoln Journal Star

Thursday, Jan 11, 2007 - 06:08:33 pm CST

Gov. Dave Heineman focused on frugality and reducing income tax rates for middle class Nebraskans in his budget message to senators Thursday — and in his $6.7 billion two-year budget plan.

“Today I am asking all Nebraskans to join with me in putting an emphasis on lowering taxes and restraining government spending in order to secure a more prosperous future for the next generation of Nebraskans,” Heineman said.

Heineman urged spending restraint across the board, telling the business community there would be no additional incentives this year, telling schools not to expect state aid beyond what the current law provides, and urging local governments to follow his example “and restrain spending.”

Story Photo
Gov. Dave Heineman (right) is greeted by Sen. Norm Wallman. (LJS File)

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NU reacts to state budget proposal
Budget highlights

Highlights of Gov. Dave Heineman’s budget. The plan must still be approved by the Legislature.
  • $6.7 billion two-year budget, a 3.8 percent average annual increase. Spending growth has averaged about 5.4 percent annually over the past decade.
  • Income tax cuts for the middle class, which will reduce tax revenue by $432 million over two years.
  • Provides money for a 2 percent state employee salary increase, though the two-year wage negotiations are at a stalemate.
  • Creates water cash fund to take care of problems in Platte River and Republican River basins and possibly elsewhere. Uses

    $2.7 million in state tax dollars and $300,000 from Nebraska Environmental Trust grants each year.
  • Fully funds the state aid formula for schools, with $832 million going to public school districts in 2009 fiscal year, a 12.2 percent increase that year.
  • Gives slim increases to University of Nebraska, less than 2 percent average growth and about $57 million less than NU says it needs.
  • Transfers $15.5 million in upcoming fiscal year from general fund to pay incentives owed to new ethanol plants.
  • Continues planning for meth prison treatment center, perhaps in Lincoln, with construction to begin in two years, with $16.5 million estimated total cost.
  • Funds public safety communications system that allows police, fire and game and parks staff across the state to communicate through radio systems, with $5 million a year for 10 years in state and other funding, eventually tapping into the cigarette tax.
  • Purchases Assurity Life Insurance building and parking lots, south of the Capitol, to consolidate state offices, using $12 million from cash reserve fund.
  • Continues job training grants at $5 million in each year, a reduction from the current $15 million funding for two years.
  • Staffs and operates 120-bed sex offender treatment program in Norfolk, primarily for people getting out of prison deemed to still be dangerous, at a cost of about $8 million a year.

    n Increases need-based scholarships for college attendance $1 million each year.

“We need to be straightforward with the citizens we serve and controlling spending is the only way to lower the amount of taxes we pay,” Heineman said.

His plan provides an average 3.8 percent growth in spending in each of the next two years. The 10-year average has been about 5.4 percent.

University of Nebraska leaders, facing a state funding increase of less than 2 percent under the plan, were quick to point out the likely result — higher tuition.

Tuition increases over the past two years have been kept low, but this proposal would almost certainly require deep program cuts and steep tuition increases, said NU President J.B. Milliken, who was “deeply disappointed” in the plan.

Heineman’s plan gives annual increases of just more than 2 percent to the three state colleges.

But the governor should be investing in higher eduction, because he’s said education and economic development go hand in hand, said Stan Carpenter, chancellor of the state college system.

“I understand the governor’s balancing act, but now is the time to invest in higher education so we can accomplish the goals he wants us to,” Carpenter said.

The governor’s budget proposal is the first step in a process that ends with senators voting on a two-year budget in May.

Over the next few months, the Legislature’s Appropriations Committee will look at the governor’s plan as it develops its proposal.

And many senators agreed with Heineman’s message of frugality, though they might debate details.

The governor is setting an appropriate tone for the session, said Lincoln Sen. Danielle Nantkes, a supporter of fiscal restraint.

But the university is one of her priorities, and her objective will be to make sure it gets the resources it needs, she said.

The Appropriations Committee can work with the proposal, said Omaha Sen. Lowen Kruse, a veteran committee member.

But he wishes the governor would stop describing Nebraska’s taxes as the nation’s sixth highest.

“…That is not a credible number,” Kruse said. “We are high, but it’s closer to 12th to 15th.”

Lincoln Sen. DiAnna Schimek also questioned the proposed NU funding. The university needs to be able to grow its research and technology capabilities, she said.

“We can’t forget the future when we are dealing with the present budget,” she said.

Not everyone agreed with the governor’s focus on income tax cuts rather than property tax cuts.

“I’m real pleased he’s looking for tax relief,” said Omaha Sen. John Synowiecki. “But I want to direct it to property taxes as much as I can. Many seniors in my district are paying more in property taxes a month than they made in house payments when they purchased their home.”

Synowiecki, an Appropriations Committee member, pointed out the governor’s plan is the start of the budget work, where committee members study every agency budget.

“I am anxious to hear how (the governor’s plan) impacts them. That’s precisely why we have a process where agencies come and inform the committee about how the governor’s plan will affect them.”

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com. Reporters JoAnne Young and Melissa Lee contributed to this story.


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big D wrote on January 11, 2007 11:57 am:
" WOW!!!!! .....$227 tax cut. That will go a long way to offset my rising property taxes..... NOT!!!! All of the other taxes this state deems necessary will wipe out this paltry cut in no time at all. Start taxing big business and end the TIF. The tax burden should be shared equally, not supported entirely by the declining middle class. "

 E Jr wrote on January 11, 2007 12:03 pm:
" Speaking as one of the people who would see a signifant income tax reduction under this plan, we do not need a tax cut. Government services have been reduced enough already. "

 Jack wrote on January 11, 2007 12:56 pm:
" Wow, $227. for a family of four. That will buy each one a pair of shoes maybe!! So as usual apparently the retireds suck it up or move the heck out. Guess what, I have no choice, I have to move. When the property taxes are four time more than my former state, thats eating me up alive, not to mention everything else is double. It is sad to see this state exist and constantly move backwards. Heineman has big words that mean nothing. Say nothing about building the state thru industry.So he's just going to get another credit card and put some of the big taxes on it. Boy won't that be a big help. This shows exactly how much ambition and knowledge Heineman has. Shamefull. He basically said, you poor people, who cares about you. "

 Bill wrote on January 11, 2007 1:29 pm:
" I like his proposal (mostly) with the exception of the estate tax. Is that really necessary? I don't think the rich need any more tax cuts, Bush & Co. have taken care of them enough. "

 Thor wrote on January 11, 2007 1:36 pm:
" Well, we are a family of two (I don't understand why they put in this family of four, two, who cares, what matters is your total income,I think), close to retirement age, make about $60,000 between the two of us. Whoop to doo, $227. Gosh, where can I spend that windfall? Yep, as soon as we retire, we're outta here. We've (hubby and me) lived in NE all our lives. I have never seen it so pathetic as far as wages/taxes. Can't wait to leave. So disappointed in Nebraska. "

 big D wrote on January 11, 2007 2:33 pm:
" hope you have your home sold already or are ready to wait till the housing market improves. Otherwise good luck. There are three houses within a block of me that have been on the market for nearly a year. I too, am retired and would like to leave this sorry state, but I don't want to give my house away to do it. The way Lincoln is losing jobs, there isn't going to be anybody left to buy a house. The proposed jobs (Verizon) coming (maybe) to Lincoln won't pay a good enough wage to allow purchase of even a moderately priced ($80,000-125,000) house., "

 Joyce wrote on January 11, 2007 2:56 pm:
" Most people have seen proprty tax increases that exceed$227 and under the plan don't have optimism in how schools will be funded this and following years. Job losses in Lincoln alone will not be matched by ethanol plant jobs. The Republican dream: dismantle order and suffer the common citizen. "

 Pete wrote on January 11, 2007 3:29 pm:
" Incentives paid to ethanol plants were more important than keeping magazine and car belt/hose jobs that number in the 100's? Someone is lost and out of touch with a policy to sustain and stabilize. Surely you state senators aren't going to sit by the empty chatter of this governor? "

 Ron wrote on January 11, 2007 3:36 pm:
" Anybody that says we don't need a tax cut is taking home big bucks, or enjoys being the laughing stock of the U.S. with near the top highest taxes. Quite interesting to see the droves moving into Nebraska because they want to pay the high property taxes plus high cost of living and the abundant amount of jobs!!!!! Heineman is trying to fool the people with his fancy big talk that means nothing. Compare him with governors of progressive states and you'll just shake your head!! "

 JT wrote on January 11, 2007 4:18 pm:
" I'm with Bill, there's no reason to completely get rid of the estate tax, just adjust it so it doesn't kill family farms. The cutting in government services is going to involve many tough decisions. Ripping Governor Heineman (a man I don't always agree with) and Nebraska does absolutely no good. "

 nrd's wrote on January 11, 2007 4:45 pm:
" My nrd raised my taxes that much this year and will again next year. But I feel good, all that money is going to the irrigators in our district. "

 DP wrote on January 11, 2007 8:33 pm:
" It's not much but at least he's not raising taxes. I have a feeling with the Democrats in power now and a possible Democrat president that our income taxes are only going to go up based on past history. "

 D wrote on January 12, 2007 4:48 am:
" University officials who already have concluded theat the end result of this budget will be higher tuition have a serious hearing problem. The elected leader of this state was calling for less spending not more money. Obviously the university official has been a careeer "public servant" with his face in the tax and spend hog trough. "

 Millionair taxpayer wrote on January 12, 2007 6:22 am:
" I have to laugh when people talk about tax breaks going to the rich, especially in Neb. The rich are paying almost all of the taxes. I have earned well over $150,000 in each of the last 10+ years in Neb. In 2004 my total tax bite (state & fed income tax, property tax, sales tax, gasoline tax, etc.) was 63% of my total income. Tax breaks for the rich? Are you kidding! It is only a Ted Kennedy vote getting motto. I finally moved to South Dakota. No state income tax, 1/2 the property tax, 1/2 the motor vehicle sales tax, 1/5 the licensing fees for vehicles, etc,. etc. Despite this we have better roads and parks! When asked about the difference between S.D. and Neb., Gov. Rounds said "the biggest difference I see is that Neb has a whole lot more goverment". Good luck with your paltry tax reduction Neb. But just wait until the Uni of Neb, Teacher' Union, Police, State, County and City employees start protesting about how this will hurt them. I'm afraid you won't see much relief. No one wants to give up any benefits. "

 E Jr wrote on January 12, 2007 10:29 am:
" I am one of the high wage earners who will get a big tax cut under this plan that I don't need. If you are going to cut taxes, do it on the people making less than $50,000 per year. "

 Former Student wrote on January 12, 2007 12:25 pm:
" I will use that $277 to pay for 1/2 of one payment on my student loan bill when I get it. Wow - what a great deal. "

 2% State Employee Raise wrote on January 12, 2007 12:28 pm:
" 2% State Employee Raise 4% Cost of Living Increase (BLS data) Where's the Benefit? "

 shadow wrote on January 12, 2007 12:37 pm:
" correct me if i am wrong but wasnt there a study that showed nebraska as the 6th highest in taxes this last year? where is this kruse fella comming from when he says we are farther down the list? $227 in tax relief isnt going to help anything. from these cuts, we will eventually end up spending more on services throughout the year than we would on these taxes. What nebraska needs to be able to fix these problems to to adopt the two house legislature so that the citezens can benefit from the checks and balances in our government systems. also i think it would be better if an impartial entity audited the funding to determine what fat could be trimmed without causing the public to get scr*wed. "

 ted wrote on January 12, 2007 3:50 pm:
" Cut the Car registration fees. Then everyone gets a tax cut, rich and poor. Neb has the highest car registration fees in the country. "

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