The Legislature spent most of Wednesday debating and advancing the state's $9.3 billion budget for 2019-21, and on property tax credits and University of Nebraska spending.

In all, seven bills were advanced.

Senators amended the work of the Appropriations Committee on two bills, the focus of which would change one thing: They rerouted $50 million over two years from the state's rainy day fund, and directed it toward property tax credits that Gov. Pete Ricketts wanted in the first place. 

The Property Tax Credit Fund was first approved by the Legislature in 2007 and has been added to four times since. This would be the fifth, and would bring the credit fund to about $275 million per year. 

The increase in the fund would give agricultural property owners about $128 in credit per $100,000 in valuation. An owner with a farm valued at $1 million would receive $1,280 in credit. The credit for non-ag land owners would be about $106 per $100,000 in valuation. 

Ricketts wanted $51 million annually for the fund, but most committee members had so much concern about the depletion of the state's rainy day fund that they took half of the proposed amount for savings. 

During debate Wednesday, Sen. Curt Friesen of Henderson, and then Sen. Lou Ann Linehan of Elkhorn, offered amendments to two bills (LB298 and LB294) to restore the entire $51 million to the tax credit fund. Linehan's amendment on LB298 succeeded on a 28-8 vote, with 25 votes needed for adoption. 

Most of those senators who voted no on the amendment, or were present not voting -- sometimes called a "soft no" -- were urban senators, showing the rural-urban split on the approach to property tax cuts. 

Appropriations Committee Chairman John Stinner, who strongly believed the rainy day fund needed shoring up, had called the amendment political expedience and pandering to the taxpayer. The state is in a down cycle economically, he said, and saving money would be the prudent thing to do. 

"But no, we're going to put politics in front of prudence," Stinner said. "It's a bad trade-off, folks. That's what Washington, D.C., does."

Omaha Sen. Steve Lathrop said he found the dip in rainy day funds to be alarming. It's critical, he said, that the Legislature become more disciplined in saving for the next downturn in the economy. 

Stinner said later he conceded on the amendment to restore the full $51 million to the tax credit fund because he knew the issue was politically volatile, that it probably had close to 25 votes and it would be a big issue for those senators who will run for re-election. 

Still, he said, he would like to get the rainy day fund to $500 million. 

Ricketts applauded senators for restoring the $51 million to tax credits. 

Sen. Steve Erdman of Bayard said during debate: "The reason that we can't put any money in the cash reserve (is) we spend too much. ... That's how you lower taxes, you spend less." 

Lincoln Sen. Anna Wishart, who is a member of the Appropriations Committee, said there are three ways senators can attempt to address high property taxes: Cut spending and reduce services; shift the tax burden as with the Revenue Committee's LB289, discussed Tuesday; or expand the tax base by growing the state's economy. 

"To me, the third option is not only the best solution, because there are no losers, but it's the only solution that will bring long-term sustainable tax relief to our state," she said. 

During afternoon debate on the mainline budget, several senators showed their displeasure with spending by the University of Nebraska. 

Stinner had said the priorities for the budget were education -- both K-12 and higher education -- aid to individuals, including Medicaid provider rates, and public safety including prisons, court and law enforcement. 

Erdman pointed out that, as Sen. Steve Halloran of Hastings alluded to on Tuesday, the university needs more consolidation of its four campuses and four administrations. 

"We are funding this university, to a large degree, maybe better than we should," he said.

Erdman said there's a problem with the higher increases the university has had with state appropriations compared to lower increases in tuition since 1997. 

But Wishart said her research has shown the state aided spending per student has been flat or decreased, after adjusting for inflation. 

The university has managed that shortfall by making spending cuts, $22 million in administration cuts last year alone and by raising tuition, she said. 

"I will not support a budget that balances our revenue shortfall off of increasing tuition rates for the future of our state," she said. 

Sen. Mike Groene of North Platte said Nebraska is third in the nation on per capita spending on higher education. 

"With 1.9 million people, maybe we're running with the wrong crowd," he said. "Maybe we ought to be running with South Dakota, North Dakota, Wyoming and Nevada, Montana, instead of the Michigans and Ohios (Big Ten schools) that have 10 and 20 times our population." 

Maybe it's breaking the state to try and be something it's not, Groene said. 

Stinner said he has spent a ton of time on the university's budget, read its audited financial statement and read its strategic plan. 

"I get the fact that there's some people in this body that like to bash the university. It's out of control, apparently, according to some people," he said. 

But the state has cut higher education 8.5 percent. Restoring 3.1 percent is marginal, he said. 

"I think higher education is a jewel for our state," he said. 

University of Nebraska President Hank Bounds said: “This budget is good for the University of Nebraska, it’s good for our state and it’s good for the students we serve." 

It's a commitment, he said, to the long-term economic growth and well-being of the state.

After the debate, senators advanced the mainline budget bill (LB294) on a 42-4 vote, with Sens. Bruce Bostelman of Brainard, Erdman, Groene and Halloran voting no. 

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Reach the writer at 402-473-7228 or jyoung@journalstar.com

On Twitter @LJSLegislature.


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