Platte Institute bearing down on tax cuts

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The Platte Institute has begun to make waves across the state with its promotional campaign to limit the annual increase in state spending to less than 2 percent.

In response, Gov. Dave Heineman has suggested that the institute say where cuts should be made in state spending.

The Journal Star editorial board agrees. It’s much easier to call for cuts as long as the discussion is limited to generalities. It’s when specifics are on the table that the dialogue begins in earnest.

It turns out that the institute is not flinching away from the challenge. Executive Director Roger Lempke says the institute already is working to  identify state spending patterns, and plans to release a report later this year.

Using economic and tax analyses from Ernie Goss, the respected economics professor from Creighton University, the institute in a report earlier this year made the argument that reductions in annual spending are necessary for Nebraska to be economically competitive.

Over the past 10 years “tax collections per capita grew by more than 56 percent in Nebraska compared to 47.4 percent nationwide and 43.1 percent for bordering states,” the institute said in its report, “The cost of being a Nebraskan.”

The institute noted that Nebraska has a higher tax burden than its neighbors, and added, “If trends continue, Nebraska will exceed national per capita tax collections by 2016 and the tax burden for a family of four at the median income level will be among the highest tax states in the nation.”

Holding annual increases to under 2 percent, however, would mean drastic change.

In the 2002-03 budget year, for example, state spending was drastically reduced during an economic slowdown. State appropriations that year increased by less than 1 percent. One highly visible impact was elimination of programs at the University of Nebraska.

A major problem facing would-be budget cutters is that options are limited. Medicaid and government assistance payments have risen at the rate of 8 percent or 9 percent over the past couple of decades, for example, but federal rules restrict cuts.

The single largest item in the state budget is state aid to schools, which are funds that are actually returned to local school districts, rather than spent by state officials. State aid to schools, however, enjoys deep public support.

So far the Platte Institute has done a creditable job of informing the public and focusing attention on significant trends.

It’s the next step — coming up with specific recommendations on how to achieve spending reductions — that could really make the institute a household name in Nebraska.