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Columnists
Reducing the size of government

Nebraskans everywhere tell me about the importance of getting government out of the way so they can work together to grow their community.

Ag producers looking to expand their operations have expressed concern about onerous regulations coming out of Washington. Small business owners feel the impact of Nebraska’s high taxes. And professionals looking to secure a license or do business with state government want a more responsive customer experience.

Stories like these are exactly why reducing the size and scope of state government is a central goal of my administration.

As President Ronald Reagan once said, “As government expands, liberty contracts.” When we get government out of the way, the state empowers job creators, families and private sector innovators to grow Nebraska. This helps keep Nebraska the best place in the world to live, work and raise a family.

Over the past few years, our team in the state of Nebraska has achieved several successes that are helping reduce the size and scope of government. Together, the Legislature and I have successfully cut the rate of growth in state spending by 90 percent.

Before I took office, the rate of growth of government was 6.5 percent. In this most recent budget, the rate of growth was only .6 percent, and we are still working to reduce the size and scope of government.

Three different approaches will be key as we continue to work to create a more effective, more efficient and more customer-focused state government going forward.

First, we are changing the culture of state government to focus more on the customer: Nebraskans like you. In July, I signed an executive order for a review of all state regulations. This review will help us look for areas to cut red tape.

Nebraska is already number one in the nation for the best regulatory environment, but there is always room for improvement. Over the past couple of years, we have also worked to change the culture of the workforce in state government. Every teammate in my state agencies is now receiving training on how to identify wasteful processes and speed up service delivery.

Second, we are changing the state’s approach to how we structure entitlements. We know that Nebraskans want to achieve greater financial independence, and we also know that taxpayers expect the state to be a good steward of their taxpayer dollars.

In 2015, we changed our unemployment program into a first-in-the-nation reemployment program. This is helping job seekers in our state get back to work more quickly. Nebraska paid out $13.75 million less in unemployment benefits in fiscal year 2016 compared to 2015, as people got back to work faster.

In that same time, we saw a 20 percent reduction in weeks of benefits claimed and a 30 percent reduction in Nebraskans reaching the end of their unemployment benefits. This enabled us in 2017 to reduce the state unemployment tax rate by 25 percent, saving businesses an estimated $17.6 million.

Thanks to the success of our reemployment efforts in this area, we are now piloting similar services in four communities to help connect families receiving food stamps with better jobs. So far, half of the participants have found better jobs. This has helped these families increase their respective salaries by an average of $6,900 a year. With better salaries, some of the participants were able to reduce their need for food stamps and about a quarter no longer need them at all.

Third, I have been working as governor to support the efforts of privately led, volunteer organizations that are serving our community. State government plays some key roles in protecting public safety, building infrastructure, and supporting private sector efforts to grow our state.

Government’s role, however, is limited and cannot fulfill every need in society. Over the years, countless Nebraskans have stepped up to meet these needs, giving us one of the highest volunteerism rates in the country.

This year, the first lady helped to launch "Bring Up Nebraska," a privately-led initiative that is connecting Nebraska’s families with resources in the community. This program aims at preventing families from reaching crisis points which require state intervention. It is just one example of how Nebraskans have come together through the years to meet the needs of their community.

These are a few of the approaches we are taking to help reduce the size and scope of government in Nebraska. Reducing the size of government does not happen by accident. Our successes will only continue with a relentless focus on making state government more effective, more efficient, and more customer-focused.

If you have any suggestions on how to make government work better for taxpayers, please call me at 402-471-2244 or email me at pete.ricketts@nebraska.gov.


Governor Pete Ricketts


Columnists
Economic forecast remains cloudy

It doesn’t take a crystal ball to tell you that farmers are hurting – reeling from a double whammy of low commodity prices and high property taxes. The latest meeting of the Nebraska Economic Forecasting Advisory Board has done little to make things brighter.

During its October meeting, the board voted to lower revenue projections for 2017-18 by $100 million and for 2018-19 by $123 million. Clearer, but not brighter.

The board provides an advisory forecast of general fund receipts used by the Legislature to craft the state’s budget. The forecast is also used by the governor to sharpen his cutting skills, which he did with a directive to state agencies under his control.

The governor’s directive outlined budget restraint actions covering the following areas: quarterly allotments of current appropriations to state agencies, boards and commissions will be reduced by one percent to incentivize additional spending restraint; agencies have been advised to prepare for further budget reductions; continued hiring freeze, travel ban, limited equipment purchases and reductions in discretionary grants in aid.

Total projected revenue receipts for fiscal year 2017-18 were lowered to $4.5 billion and $4.7 billion for the following year. The end result of the revised forecast is a projected general fund financial status that is $194.4 million short of the constitutionally directed minimum statutory cash reserve.

Results of the forecast and other pending adjustments will be reviewed during a mid-November meeting of the Tax Rate Review Committee made up of chairs of several key legislative committees and officials from the state Department of Revenue. The next Nebraska Economic Forecasting Board meeting is scheduled for Feb. 28, during the first session of the 106th Legislature.

This casts the session spotlight on taxes and the budget. But one can’t forget about a troubled prison system that is already exempt from Governor Ricketts’ afore-mentioned budget restraints. The Department of Corrections needs more money for staffing which some believe will solve the woes of a drastically overcrowded system – the second worst in the United States – and the increasing number of violent attacks by inmates on staff and inmates on inmates.

I didn’t say that I’m buying their idea as the solution. But there is the matter of a pending lawsuit that could force DOC to look hard at alternative sentencing, early release of non-violent offenders or construction of more prisons. That situation should hang like a black cloud over the Legislature’s consideration of any other business.

Things are further complicated by Ricketts’ penchant for income tax relief – when the majority is clamoring for property tax relief – and his resistance to corrections in sales tax measures, which could go a long way toward bolstering an otherwise anemic revenue stream. He has said he is against a bill that would mandate collection of sales tax on internet sales and also considers the removal of existing tax exemptions as a blatant increase in taxes.

He said that he and the Legislature have successfully worked together to constrain spending and cut the rate of growth in government from 6.5 percent to 0.6 percent. He said when revenues fall short of forecasts, Nebraskans expect state government to exhibit the same fiscal restraint as they do in their own households.

I'm wondering, how much more can you cut before the bleeding begins? When the bleeding begins, how do you stop it? Ask the governors of Kansas and Oklahoma. When do we focus on increasing the income side of the equation?

Even State Tax Commissioner Tony Fulton – a former state senator – admits that Nebraska has some questionable tax exemptions. Then there’s the issue of collecting the state sales taxes that already are legally owed for online purchases on the internet. State officials estimate that could bring an additional $30 million to $40 million into the state coffers. But Ricketts opposed a bill to do just that last session and the matter stalled.

Enough with the cutting already. Let’s sacrifice some sacred cows and bring money into the revenue stream. The time to act is now.


Columnists
Tax reform moves forward

Simplifying our broken tax system is no easy task, but we know Americans need relief.

This is why we introduced a bill at the start of November to streamline the tax code and help people keep more of what they earn. We then spent the week of Nov. 6 debating the details in a Ways and Means Committee markup, where the bill is prepared for a vote by the full House. The legislation passed out of committee with my support, and we anticipate a House vote to quickly follow.

Americans at all income levels will see tax cuts under this bill, which the head of the nonpartisan Joint Committee on Taxation confirmed on the first day of our markup. Many provisions are designed to help working families, namely the doubling of the standard deduction, increasing the child tax credit, and lowering tax rates across the board.

Doubling the standard deduction will significantly increase the zero-tax bracket. Under our bill, a couple’s first $24,000 of income is tax-free, compared to $12,000 today. Filers can also keep the money they would normally spend on tax experts or software, as nine out of 10 Americans will be able to file their taxes on a form the size of a postcard. With this financial boost, families can meet more household needs while saving for the future.

In addition to helping Americans keep more of their money, this bill also sets the stage for Americans to earn more money. By cutting the tax rate on small businesses to a historic low and reducing the corporate tax rate to 20 percent to allow American companies to compete in the global economy, job creators will be able to add more positions, raise wages and invest here at home.

Our bill also firmly rejects the idea of death being a taxable event. The death tax runs counter to the American dream, so it is not surprising an April 2017 NPR report found a majority of Americans support repealing it permanently. Our bill phases out the death tax over six years and, in the meantime, doubles the exclusion amount to provide immediate relief.

Eliminating the death tax will have a positive ripple effect throughout the economy. Right now, the death tax only represents one half of one percent of all federal revenue. However, the flow of these dollars to the Internal Revenue Service has been a significant drain on economic growth. Our economy has lost out on more than $1.1 trillion in capital since the introduction of the death tax, according to the Joint Economic Committee.

Another study by the Tax Foundation found normal taxation on the amount of capital infused back into the economy by repealing the death tax would more than pay for itself, actually yielding an additional $8 billion in revenue than we have seen with the death tax in place. As Americans for Tax Reform said in response, “You heard that right – we’d actually collect more tax revenue if we stopped collecting the death tax.”

We cannot let this opportunity to boldly reform the tax code pass us by, and people across the country agree. In fact, more than 40 conservative and tax policy organizations signed onto a letter on Nov. 9 declaring the bill “a victory for the middle class.”

There is more work to do, but we are moving in the right direction. It’s time for real relief.


Adrian Smith


J.L. Schmidt, Nebraska Press Association