Legislators lukewarm to Heineman's heat on taxes, Medicaid, prisons

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January 15, 2014 - 4:24pm

Nebraska legislative leaders gave a lukewarm response Wednesday to Gov. Dave Heineman’s call for lower taxes, continued opposition to expanding Medicaid, and tougher laws governing early release from prison.

Heineman sounded some familiar themes in his last State of the State speech before leaving office next year due to term limits. He declared  the implementation of “Obamacare” has been “one disaster after another,” and warned the state should not agree to expand Medicaid.

Advocates say such expansion would give about 50,000 more Nebraskans health insurance, with the federal government picking up the entire cost for the first two years, and 90 percent eventually. But the governor disagreed.

“The federal government is already trillions of dollars in debt and is unlikely to fulfill its promised commitment. We’ve seen this happen before. For example, the federal government’s commitment to special education funding has not been met,” he said. “We have researched and studied the Medicaid expansion issue carefully, thoughtfully and methodically. The responsible choice is to reject this optional Medicaid expansion.”

Lincoln Sen. Kathy Campbell, chairwoman of the Health and Human Services Committee, said the governor’s position remained the same despite changes in the proposed expansion. Campbell and others have introduced a new bill to use federal Medicaid dollars to buy private insurance, and establish incentives for people to get checkups and risk assessments.

“I thought we heard from the governor today on Medicaid expansion what we heard last year. And there’s been substantial change in the new bill. So that’s what I’m going to say to my colleagues. This is a different bill, this is a different approach, this is certainly stronger health policy,” Campbell said.

Heineman also called for a change in the state’s “good time” law for prison inmates, whereby they can qualify for half off their sentence if they behave in prison. “Allowing the most violent criminals to enter into our state’s prison system and have their judge-imposed sentences automatically reduced by one-half through the use of the current ‘good time’ program is not sound public policy,” he declared.

Omaha Sen. Brad Ashford, chairman of the Judiciary Committee, disagreed. “He’s wrong on prison reform, when he talks about the good time law being the problem,” Ashford said.

However, Ashford applauded the governor for being open to proposals for more supervision after prisoners are released and to studying ways to avoid prison overcrowding in the future.

Heineman devoted the longest section of his speech to taxes, which he said should be reduced. “The state of Nebraska has $1.2 billion in its checking and savings accounts. That’s right. As I stand before you here today, the state of Nebraska has $1.2 billion in cash. Nebraska is overtaxing its citizens right now, and we need to change that,” Heineman said.

The “checking account” Heineman referred to is the state’s general fund balance. Lincoln Sen. Danielle Conrad cautioned against using a “snapshot” of that balance, which she compared to looking at your bank account right after you’ve deposited your paycheck but before paying bills.

The “savings account” Heineman referred to is the state’s cash reserve, which currently contains about $722 million. Sen. Galen Hadley of Kearney, chairman of the Revenue committee, suggested that’s in the right ballpark. “I have been doing some reading on it, and a lot of the literature talks about two months revenues as being an appropriate cash reserve. I hope people remember the reason for a cash reserve is to keep us from raising taxes during periods of downturn,” Hadley said.

Two month’s worth of revenues for Nebraska’s $4 billion state budget would be about $667 million.

Sen. Heath Mello of Omaha, chairman of the Appropriations Committee, said he was disappointed in Heineman’s tax cut proposal in the last year of his term. “I’m concerned that the governor is leaving office right now, and not concerned about what happens next year when he’s not in office. Where myself and a number of other legislators will be left to have to deal with the fiscal consequences of whatever decisions we make this year,” Mello said.

At a news conference the night before his speech, Heineman asked of  Mello and other critics “Why is it they want to continue to spend, but we can’t do tax relief? Because they believe in more spending and higher taxes,” he said.

And so the stage is set for a series of battles, and possible compromises, between now and when the Legislature adjourns in April.

 

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