Governor digging in for his tax cuts

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February 2, 2012 - 6:00pm

Gov. Dave Heineman is doubling down in his push for tax cuts, while criticizing alternative uses of money that others continue to push.

Heineman's comments came after a week in which health care providers and their clients pushed to restore Medicaid cuts, and the University of Nebraska promoted construction projects. The governor said he had not changed his priorities. "Before we go out and spend a lot of money on special interest projects, Nebraskans deserve to know that they're going to get tax relief. They need a little pay raise from their state government. And we can do that by lowering their taxes," he said. "That should be their (senators') priority. And I'm just a little nervous as I hear people talking: There seems to be a rush to spend the money, when the first priority ought to be tax relief."

Asked for examples of special interest spending, Heineman mentioned the University's proposal for $91 million in construction projects. And he said a proposed veterinary diagnostic center in Lincoln would actually cost about $50 million more. Sen. Lavon Heidemann, chairman of the Appropriations Committee, confirmed he's heard estimates in that range, but added that's no surprise, considering the $5 million the University is seeking for that project is planning money.

The governor also complained that the Nebraska Hospital Association wants a sales tax exemption, but opposes his general tax cut proposal. "They want a tax break, but then I find out in the last 24 hours, Oh no. Not only do we want our tax break, but no one should get tax relief,'" he said.

Hospital Association lobbyist Bruce Rieker said the sales tax exemption is a longstanding proposal that would lower the cost of supplies and care at clinics owned by hospitals. And he said while hospitals like the idea of general tax cuts, the problem is the timing.

"That's why we are opposed the governor's proposed tax cuts," Rieker said. "When we look at the projected shortfall for the next biennium -- and we're looking at over $400 million dollars shortfall - and then to put a tax cut of $326 million on top of that it puts us right back in the place that we were 13 months ago, having an $800- or $900 million dollar shortfall and having to make those cuts."

Heineman said the projected shortfall depends on unrealistic assumptions about school aid and other spending increases. He said he's sticking with the proposal introduced for him by Revenue Committee Chairwoman Sen. Abbie Cornett to reduce individual and corporate income taxes and eliminate the inheritance tax. Heineman said no major proposals are going to move before the state's revenue forecast is updated Feb. 24, and while he's not ruling out other senators' proposals, his priority remains clear. "The taxpayers of this state should get this tax relief package that Sen. Cornett and I worked on. That should be the highest priority. They deserve comprehensive tax relief. You get that priority accomplished first, then we'll talk about the rest," he declared.

Despite the governor's adamancy, even some senators who generally share his priorities say they have to be balanced with other proposals. Sen. Jim Smith of Papillion cited the example of bills offering targeted tax incentives for everything from data centers to film production companies, and said "We do need to see tax relief for our citizens and our businesses. We can't do both." As for what the legislative outcome will be, Smith predicted "It's going to be somewhere in the middle."

Where that balance is struck, and whether its elements follow or precede the governor's proposals, will be the subject lots of discussion in the Legislature in the weeks to come.

 

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