| PERSPECTIVE |
(April 19, 2002) -
The Nebraska Legislature wrapped up its 2002 session Friday, April 19 – a session dominated by money problems. Mike Tobias and Andrea Gallagher followed the session for our Capitol View coverage, and take a look back at what lawmakers did – and did not – accomplish.
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Transcript Part 1 of Perspective Transcript Part 2 of Perspective
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Watch part 1 of the Perspective (Budget Issues) here:| Click Here
Watch part 2 of the Perspective (Other Issues) here:| Click Here
Gov. Mike Johanns talks to lawmakers on the closing day of the session:| Click Here |
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Transcript of 2002 Legislature - Part 1: The Budget Crisis
[Mike Tobias/Reporting] The bad news came from the February meeting of the Economic Forecasting Advisory Board. They said Nebraska is bringing in a lot less tax revenue than the budget was built on - 186 million less. This shortfall would grow to more than 220 million by the end of the session.
Some blame the economy. The Legislative Fiscal Office says state revenue usually grows around 6 percent a year. For the second straight year it's just half that.
[Michael Calvert/Legislative Fiscal Office Director] I've never seen that. I've never seen two consecutive years, if it happens to come to be true, two consecutive years of that level of growth.
[Tobias] Others say we're spending too much. Tax watchdog John Jordison points to a study showing state and local government spending increasing twice as fast as inflation over the last 20 years.
[John Jordison/President, NE Tax Research Council] Certainly it is rapid growth. And I would submit there are few Nebraskans whose own wages or salaries increased at that rate. And if that is the case, than it becomes two diverging lines. At some point down the road state and local government may not be affordable unless Nebraskans' wages keep pace somehow.
[Tobias] Governor Mike Johanns unveiled his solution first - a 50-50 mix of budget reductions and revenue increases. He called for increasing cigarette taxes by 50 cents a pack, delaying some corporate tax breaks, cutting 20 million in state aid to schools and 10 million in Medicaid, and reducing most state agency budgets by 3 percent. Johanns said his reductions would still leave most agency budgets larger than last year.
[Gov. Mike Johanns] We cannot spend our way out of this problem. And I believe you can't tax your way out of this issue. I believe we've got to compress, and we've got to pull back on the spending side of the ledger, and we have to do that to get to a balanced budget.
[Tobias] Lawmakers had other ideas. A package put together by the Appropriations and Revenue committees called for more taxes and fewer cuts. It eventually passed and survived the Governor's veto.
On the spending side senators passed 3 percent cuts for most agencies, 2 percent for the State Patrol and a few others. Health and Human Services says this may mean more layoffs. Other agencies say they'll manage the reduction by restricting travel and delaying equipment purchases. Higher education - including the University of Nebraska - was cut just 1 percent. Appropriations Committee chair Roger Wehrbein fought for the University, saying further cuts would hurt rural Nebraska.
[Sen. Roger Wehrbein/Plattsmouth] It's going to go to extension and research. It's going to hurt the very areas of Nebraska that desperately need continued help. Whether it's Management for Tomorrow, the Main Street program, all of those agriculture-related areas, the areas of value-added development. Who's going to do that if it isn't the University engine.
[Tobias] Senators cut state aid to schools by 22 million - 3 to 5 percent for each school district. For example, this means about 3.7 million dollars less for the Omaha Public Schools, 54 thousand less for David City schools.
[Sen. Doug Kristensen/Minden] I think this is modest. Most of the schools think this is modest as well. Does it mean there is going to be an automatic increase in property taxes? It does not. Particularly if they have a levy limit. What might they have to do? They may just have to do what this body just got done doing for the last two days. And that's making some cuts and some reductions.
[Sen. Ed Schrock/Elm Creek] It means a loss of teachers, or a property tax increase. Neither one can my district afford. I have four schools that have overridden their levy, two that probably will be considering it, and others, their cash reserves are dwindling. I can't vote for this.
[Tobias] Individual school districts will have the option of raising local property taxes to make up for the loss in state aid.
The Hastings Correctional Center closes as part of additional cuts suggested by the governor late in the session. Closing the 186 bed minimum security prison in July saves 2 and a half million dollars but costs 74 jobs.
[Rick Sheehy/Hastings Mayor] Also a number of those 74 have spouses and children, so we could be looking at an impact of up to 200 people within our community, if they had to leave and go somewhere else.
[Tobias] Prisoners will be moved to the State Penitentiary in Lincoln and other facilities. Other late reductions suggested by the governor cut almost a million dollars in grants for value-added agriculture efforts and eliminated the Rural Development Commission, saving 350 thousand.
Most debate centered on tax increases. Some called for a comprehensive overhaul of the tax base, eliminating many tax exemptions. Others wanted a 2 and one-half percent personal income tax hike, or a half-cent sales tax hike.
In the waning days of the session, lawmakers settled on a temporary fix that had just enough support to survive a governor's veto. A half-cent increase in state sales tax for one year, starting Oct. 1. A 2 and one-half percent income tax hike for one year, starting Jan. 1, 2003. They also increased cigarette taxes by 30 cents a package for two years beginning Oct. 1, and permanently eliminated sales tax exemptions for things like security and janitorial services. The typical Nebraska family will pay about $60 more in sales tax and $40 more income tax.
[Sen. David Landis/Lincoln] It treats us generally equally across the tax basis, as to their contribution level.
[Sen. Don Pederson/North Platte] We have reached a point where we have to unite behind a certain proposal. And I think the package that has been put together is a good package.
[Sen. Adrian Smith/Gering] The fact is that we're asking for a lot more money from the citizens and I don't think that's the right thing to do in a slowing economy.
[Tobias] In the end, lawmakers passed about 50 million dollars more in cuts and tax increases than is needed to balance the budget through June - the end of this fiscal year. But if the state continues to take in fewer tax dollars than expected - as it did for March - that extra money will quickly disappear. Reporting for Capitol View, I'm Mike Tobias.
Transcript of 2002 Legislature - Part 2
[Andrea Gallagher/Reporting] At the beginning of the 2002 legislative session - the governor gave his state of the state address and talked about September 11th - still fresh on the minds of many Nebraskans.
[Gov. Mike Johanns] The jolt to our nation's, and to a lesser extent, our state's economy following September 11th left no doubt about the need to pull back on state government spending and restructure our budget.
[Gallagher] The governor also highlighted the state budget shortfall. At that time, lawmakers knew they were at least 50 million dollars in debt…that would later grow to more than 220 million. As a result, others predicted the legislature would not have the time or money to debate issues with big price tags.
[Sen. Doug Kristensen/Minden] There's lots of needs in the state of Nebraska, but they require money and we don't have money this year or at least right now so we're going to talk about social issues and that's not to be looked down upon, that's just the fact about what's going to happen.
[Gallagher] One of the hottest topics over the course of the past 3 sessions came up early and disappeared early….fetal tissue research. The same arguments came up again - abortion opponents saying the state shouldn't be using aborted fetuses for research, and the other side arguing that medical research is too important.
The measure to stop the research stalled, and the bill's sponsor did not have enough votes to get it back on the agenda.
[Ron Withem/NU Lobbyist] It's apparent to me that the longer this issue is debated and the more people know about it, the less support there is for the ban.
[Julie Schmit-Albin] I don't know if this is the end of this issue, perhaps it is, but I don't think that pro-life Nebraskans want it to be the definitive statement.
[Gallagher] Another controversial issue did pass - the fetal homicide bill. When a pregnant woman was murdered in North Platte - it gave new life to an issue that's been in front of lawmakers before. The fetal homicide bill would enable prosecutors to charge the murderer with 2 homicides instead of one if a pregnant woman was killed. With heavy opposition from Senator Ernie Chambers, the bill passed and the governor signed it into law.
[Greg Schleppenbach/Catholic Conference] It's a good bill that recognizes and respects the choice of mothers to give recognition and protection to what they view as their unborn child.
[Gallagher] Another attempt to change Nebraska's method of execution ran out of steam. Nebraska is now the only state with the electric chair as its only form of capital punishment. Alabama just passed a lethal injection bill this year. Senator Jon Bruning made it his priority to pass this bill. But with the budget problems looming, time ran out.
[Sen. Jon Bruning/Sarpy County] I'm disappointed. I think it's something Nebraska needs to do. We're going to be the last state in the country without lethal injection, or without a method other than electrocution. IT's too bad Nebraska continues to rely on a method that will likely be ruled unconstitutional at any time.
[Gallagher] Lawmakers did have time to pass a measure affecting the governor's wife. Previously, Stephanie Johanns would travel with her husband using money from private donors - many of them wealthy lobbyists. A measure sponsored by Senator Ernie Chambers would change it so the governor could instead use campaign contributions.
[Sen. Ernie Chambers/Omaha] When lobbyists and bigshots contribute money to high-ranking politicians, the public knows it's designed to influence politicians.
[Gallagher] A measure protecting Nebraskans from identity theft also made it through the legislature. Last year in the state, there was close to 800 complaints - most of them from credit card fraud. Senator Pam Redfield's bill makes it a crime to commit identity fraud.
[Ina Leutbecher/Identity Fraud Victim] They've opened up accounts at various businesses under my name, they've been changing things under my name. Right now the figures are roughly between 20 and 25,000 dollars that is owed in my name.
[Gallagher] Parents will now have to put their children up to age six in car booster seats. The previous age was 5 years old. Children under 16 must also wear seatbelts.
[Sen. Nancy Thompson/Papillion] The way the law is currently written, they have to be in an adult seatbelt and it crosses their necks and vital organs and it's a dangerous situation, so this puts us in a better position to educate people on how children should be restrained.
[Gallagher] Many other familiar issues came and went….such as legalizing gambling on Indian Reservations…..…..requiring insurance companies to cover women's reproductive problems….and a bill that would require students to refresh their knowledge in American history. Many of these issues will come up again in the next legislative session…..and a couple senators will say goodbye to their legislative duties….Senator George Coordsen of Hebron will retire after 16 years in the Unicameral….and Sarpy County Senator Jon Bruning is leaving to run for Attorney General…….Reporting for Statewide, I'm Andrea Gallagher.