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.”

“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.