| State Senators face some difficult choices in the budget-cutting special session of the Nebraska Legislature beginning this Wednesday, November 4th. With the magnitude of the $334 million shortfall in the state budget, I've held off from offering any easy solutions - understanding that there is nothing of the sort. I've even waited for Governor Dave Heineman to offer up his own proposal for cutting the state budget before really jumping into the fray.
Well, Heineman finally unveiled his proposal on Monday afternoon - just 48 hours before the legislative special session is set to begin. I'm not afraid to say that there are some parts of Heineman's plan with which I completely agree. For starters, he's absolutely right to insist that the state maintain a strong cash reserve. The state is already relying on $250 million from the so-called 'rainy day fund' in the current budget - with every forecast for the next two years indicating more rain than we're prepared to handle. The remaining cash reserve of $325 million may sound like a lot of money that is sure to invite temptations to avoid the most painful budget cuts. However, this figure already falls well short of the projected $568 million defecit in the state's next biennial budget (FY 2012 - 2013).
The time for wishful thinking and putting off tough choices has passed. Heineman and the legislature already fell victim to a false sense of security earlier this year when they passed a budget that relied so heavily on one-time stimulus dollars and cash reserves to fund continuing obligations. At this point, even taking a sidelong glance at the remaining cash reserves would be an act of foolishness and self-destructiveness.
Heineman has also proposed eliminating planned increases and maintaining the current funding level for public school education in the second year of the biennium. Although certain to put the crunch on school districts in the face of rising costs, this appears to be a reasonable - perhaps even necessary - adjustment. Yes, the chickens are coming home to roost early, and school districts thought they'd have more time to prepare for the inevitable. But, attempting to hold the line on spending between one year and the next should prove a very good trial run for the total and complete disaster public schools could be seeing in lost state funding just two years down the road.
One of the essential questions before any education funds are cut must be how they might affect eligibility for present and future stimulus dollars. It appears Heineman has already given the state's stimulus fund obligations some thought in slightly reducing the impact of across the board cuts on higher education - at least, as a matter of percentages. But, legislators will have to go over plans with a fine toothed comb to ensure people are aware of how our choices might handicap the state in terms of potential matching dollars and lost opportunities.
There's a world of nit-picking to be done on the other points and priorities revealed in Heineman's plan. However, one glaring defect reigns supreme in defying all reason and any sense of accountability. This is Heineman's unsurprising but incredibily cynical resistance to any changes in the two year-old property tax credit program - which was passed in 2007 on the promise that it would be "temporary" and - according to Speaker of the Legislature Mike Flood - "subject to the ups and downs of the economy."
Well, guess what, the economy has long since taken a downward turn, and the state can no longer afford this program's annual costs of $115 million. That's an added $230 million burden during the two years of the biennium. In other words, roughly two-thirds of the total shortfall in the state budget would be eliminated by the Legislature simply keeping its word and striking this horrendously flawed property tax credit program.
The real insult underlying this program is in Heineman's deceitful defense of his plan to maintain it:
"My proposal was developed with middle class Nebraska families in mind," Gov. Heineman said. "When family income is down, families reduce spending. When business income is down, businesses reduce spending. When state revenues are down, state government should reduce its spending"....
The Governor's budget...maintains tax relief programs enacted during the past four years and continues the property tax credit program begun two years ago. In FY 2010 and 2011, the program will provide $230 million in tax credits to property owners.
Gov. Heineman said, "Many Nebraska families are struggling in the current economy and failing to fund this program would be a property tax increase on Nebraska's homeowners. In an economic downturn, increasing property taxes on middle class families, seniors living on fixed incomes, small businesses, and farmers and ranchers is unacceptable. I will oppose any attempt to increase taxes on Nebraska's middle class families."
Dave Heineman is a liar. He is lying through his teeth to the people of Nebraska by acting as if this property tax credit does a damn thing to help "Nebraska homeowners" or "middle class families." This is giveaway to the largest landowners and the wealthiest corporations in the state - pure and simple.
Nowhere is this more clear than in the example of billionaire Ted Turner. Under Heineman's property tax credit, Ted Turner receives more than $73,000 a year. His annual tax credit is far greater than the income of Nebraska's average middle class family. Adding insult to injury, it's the income and sales taxes paid to the state by Nebraska's middle class families that are then being used to pay Ted Turner's property taxes.
In Dave Heineman's 2007 Inaugural Address, he declared, "our efforts at the state level to address local property taxes are a tax shift, not a tax cut and each one increases state spending." Of course, Heineman's singing a different tune now protecting this $230 million "Ted Turner entitlement" and pretending that eliminating it (as promised) would be a tax increase. But, the simple fact remains that what we're talking about is a tax shift - from a billionaire landowner who doesn't even live in the state directly onto the backs of the people of Nebraska.
Sure, Nebraska homeowners do see a tiny pittance from this tax credit. The average Nebraska homeowner gets about $85 annually - a little more than $7 a month. Contrast that with the estimated three quarters of a million dollars in state money that's going towards covering Union Pacific's local property taxes. Again, that money is collected from income and sales taxes paid for by the people of Nebraska. That's a tax shift that should have every Nebraska homeowner and middle-class family up in arms, calling for the heads of Heineman and any other political leaders who willfully perpetuate such blatant fraud.
The people of Nebraska have a choice. They can continue paying for Ted Turner and Union Pacific's property taxes or they can call their state senators, write their local newspapers, and demand that this outrageous tax shift onto the middle class finally be killed. This alone would take care of two-thirds of our state budget shortfall while erasing one of the grossest inequities imaginable in state tax policy.
Heineman promises to "oppose any attempt to increase taxes on Nebraska's middle class families." In reality, all that means is protecting a status quo in which middle class families are paying Ted Turner's property taxes. It was bad enough when this program was first passed on a temporary basis. Now, Heineman's doing everything in his power to make it a permanent Ted Turner entitlement.
If that's not the Nebraska you believe in, then this special sesson is the time to fight back - perhaps your last chance before it really is too late. |
