Income tax cuts; moving Grand Island Vets Home discussed in Legislature

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February 13, 2014 - 5:40pm

Sen. Mike Gloor discusses moving the Grand Island Veteran's Home.  (Photo by Fred Knapp, NET News)

Nebraska lawmakers wrestled with changing the state’s income tax, requiring legislative approval of moving state facilities like veterans’ homes, and moved toward giving veterans a tuition tax break on Thursday.

Discussion of income taxes dominated a hearing by the Revenue Committee. Omaha Sen. Burke Harr introduced a bill that would cut Nebraska’s income taxes in all brackets. That would include reducing the top rate from just less than 7 percent to just less than 6 percent.

Harr said that would boost the state’s economy. “Bottom line, we need to lower taxes for our hardworking taxpayers to help attract new jobs to Nebraska. This is not a one-year deal or a short-term fix. But this will promote long-term economic growth and boost job creation,” he said.

Sen. Galen Hadley of Kearney, chairman of the Revenue Committee, expressed skepticism about the proposal. “If we pass this or something like this we’ve got to take it out of the cash reserve this year, right?” he asked. “There’s no place else to go unless we go back into the two-year budget and reduce expenditures for this coming year.”

Harr said that could be handled by delaying the effective date of his proposal. He also called the cost of the proposal in its current form -- $140 million next fiscal year, and more than $400 million the year after – “unaffordable.” But he said it was a starting point for negotiation.

The proposal is supported by business groups but opposed by critics who say most of its benefits will flow to upper income earners. Those critics supported a competing proposal by Sen. Al Davis of Hyannis to raise rates on upper income earners while cutting them for the middle class.

Also on Thursday afternoon, the Government, Military and Veteran’s Affairs Committee heard arguments over a proposal to require legislative approval before transferring state services with payroll or capital construction costs of $15 million or more. The proposal by Grand Island Sen. Mike Gloor would apply retroactively to last year’s decision by Gov. Dave Heineman to move a state veteran’s home from Grand Island to Kearney.

Grand Island Mayor Jay Vavricek told senators he supports the proposal. “The Grand Island veterans home is on life support and needs your immediate attention. The bugles are sounding and it’s not taps they’re playing, it’s reveille,” he said. Gloor’s proposal would promote greater transparency and public trust, “so we never, so we never have to endure what we’re enduring in otherwise proud and outstanding communities,” he said.

Hadley defended the selection process in which three state agency directors make site visits and then rated the proposals, with the governor making the final decision. “I hope that we don’t set up a process for evaluation and then second-guess the evaluators, he said, describing the process as “fair and aboveboard.” “Trying to go back and change the decision is setting bad policy for the state of Nebraska,” he added. The committee took no immediate action on the bill.

The veteran’s tuition break is contained in a bill by Bellevue Sen. Sue Crawford. It would apply to retiring veterans and their families. It would waive requirements that people live in the state for six months or a year, depending on which institution they want to attend, before being eligible for in-state tuition. Crawford said that would help not only veterans, but the state’s higher education institutions as well.

“Waiving residency requirements for veterans allows Nebraska to recruit and retain student veterans who experience the good life first hand and want to return and remain in Nebraska, and to use their book stipends and monthly living allowances and tuition benefits here in Nebraska. It also allows our universities to market and to recruit in Texas, Colorado, and other states with high numbers of separating service members,” Crawford  declared.

Sen. Bob Krist of Omaha also said the change might help Nebraska’s standing if another base realignment and closing commission considered closing Offutt Air Force Base or other facilities in the state. Senators voted 39-0 first round approval for the bill.

Senators also gave first round approval to a bill to have state education officials identify three schools that need help and intervene to help them. Education officials say the move will strengthen Nebraska’s chances of getting a waiver from federal mandates on how to spend federal funds.

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