2018 Legislature: Lots of action, but tax issue left hanging

April 20, 2018, 6:45 a.m. ·

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The Nebraska Capitol (Photo by Fred Knapp, NET News)

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The Nebraska Legislature wrapped up its 2018 session this week. Senators got some things done, but left some big decisions still to be made.


Ask Sen. John Stinner what he thinks of the job done by the Nebraska Legislature in the 2018 session, and he seems to have his enthusiasm well under control.

“It’s been a tough session, a long session, a lot of late nights, but I think we’ve done an okay job,” Stinner said.


Sen. John Stinner (Photo courtesy Nebraska Legislature)

Stinner chairs the Appropriations Committee, which shapes the state’s budget. When tax revenues came in lower than projected, the committee took Gov. Pete Ricketts’ recommendations for cuts and softened some of them – noticeably, reducing the governor’s recommended cut next year for the University of Nebraska and other state colleges, from four percent down to one percent.

The full Legislature then passed the budget, which also takes another $100 million from the state’s cash reserve. That will leave less than $300 million – about three weeks’ worth of state spending -- in the rainy day fund, compared to more than $700 million two years ago. Sen. Paul Schumacher said that’s a concern.

“We’ve drained down the cash reserve even farther. We are now approaching very rapidly the danger zone. We’ve refused to raise revenue necessary to fund previously approved budgets. And we’ve spent a lot of time talking about taxes, knowing darn good and well that there’s no mechanism to reduce taxes and remain solvent,” Schumacher said.

Pushing that talk of cutting taxes were Ricketts and Sen. Jim Smith, chairman of the Revenue Committee. Their initiative to gradually reduce property and income taxes over the course of a decade failed – caught between those who said it was too little, too late, and those who said it would cost the state too much.

Nevertheless, Smith still sees some success in the session.

“There’s two ways of looking at success: There’s moving positive legislation. But then you also have to look at…you avoid bad things happening. And I think we avoided some bad things happening this year, and for me that was we avoided tax increases,” Smith said.

Sen. Steve Erdman (Photo courtesy Nebraska Legislature)

They did that, in part, by passing legislation to create a state personal exemption to replace the one abolished by federal tax changes. Without that, state income taxes would have risen by more than $200 million.

A proposal to cut taxes even more, by Sen. Steve Erdman, never made it out of the Revenue Committee. It would have had the state give people an income tax refund for half of what they pay in property taxes for schools – about a 30 percent property tax cut -- at an estimated cost of over a billion dollars a year.

Erdman said senators missed an opportunity.

“We had an opportunity to fix this in the Legislature, and we chose not to. Now it’s up to the people to decide, and they’ll sign the petition and put it on the ballot and we’ll decide in November,” Erdman said.

Erdman was referring to a ballot initiative that would do what his legislative proposal would have done. If supporters collect about 85,000 valid signatures by July 5, voters would get to decide in November if it should become law.

Sen. Patty Pansing Brooks said creating a new state obligation equal to about a quarter of the state budget without saying how to pay for it is a bad idea.

“It would be terrible for public education. It would be terrible for low income people. We’re going to make more and more and more cuts. And it would be terrible for the university,” Pansing Brooks said.

Sen. Patty Pansing Brooks (Photo courtesy Nebraska Legislature)

In contrast to the inaction on taxes, lawmakers approved lots of substantive legislation this year. They allowed speed limits on state highways to be raised from 60 to 65 miles an hour, and from 65 to 70 on expressways, where conditions permit. They raised the age to which children are required to be in booster seats, from 6 to 8.

Lawmakers also prohibited giving federal family planning funds to organizations that also perform abortions, a move expected to deny funding to Planned Parenthood. They required bottle clubs, where people can bring their own alcohol and interact with nude dancers, to get liquor licenses, subjecting them to more regulation.

Senators also allowed state employees to file complaints of sexual harassment with the Department of Administrative Services instead of their own agencies, a move spurred by complaints at the Nebraska State Patrol. And they required the Department of Correctional Services and the Board of Parole to plan for speeding up parole reviews if the state misses a deadline to reduce prison overcrowding by 2020.

In his speech to senators at the end of the session, Ricketts acknowledged accomplishments, while lamenting the failure of property tax relief. But the governor vowed to keep working on the issue.

“Tax relief is controlling our spending and putting more money back into the pockets of hardworking Nebraskans. And within that framework, I will work continuously with senators and other groups on how we can achieve property tax relief for our hardworking Nebraskans,” Ricketts said.

A lot could change before the next chance the Legislature has to do something about that. Thirteen senators called for a special session on property taxes, but it would take 33 signing up by Monday to trigger such a call, making it highly unlikely.

Then there is the petition drive, which could mandate a tax cut, while leaving it up to the Legislature to figure out how to fill the budget hole.

And then there is the election, which could change who’s around for the next attempt to deal with the issue, when the Legislature is scheduled to reconvene next January.