Nebraska Gov. Pete Ricketts was in Beatrice on Thursday to talk with the Rotary Club about the current legislative session.
Before the lunchtime meeting at Valentino’s in Beatrice, Ricketts stopped into the Daily Sun offices to discuss a few key issues facing the unicameral.
“The big things in this legislative session are going to be budget and taxes,” Ricketts said. “And they're really two sides of the same coin.”
The state has to have a balanced budget, he said, and with farm incomes declining and state revenues lagging behind the forecast, the state has to close a $200 million gap in the budget this year.
Ricketts said he made recommendations to the legislature on how to do that, which would involve a 2 percent across-the-board cut this year and a 4 percent across-the-board cut for next year.
With those cuts, he said, some things would need to be prioritized. For example, he said, K through 12 education would be exempted from those cuts, while corrections and aid for those with developmental disabilities would also be priorities.
“If we do that,” he said, “if the Legislature accepts my recommendations, then our budget will grow at 0.2 percent, which is essentially flat, compared to the 6.5 percent it was growing when I took over.”
The next thing he said the state should focus on is LB947, the Nebraska Property Tax Cuts and Opportunity Act. LB947 would lower the income tax rate from 6.84 percent to 6.75 percent in 2019 and to 6.69 percent in 2020. It would lower the current corporate income tax rate to 6.69 percent over two years.
The bill also restructures the current property tax into two programs, he said, one for agriculture and one for homeowners, which would be based on state taxes. If passed, it would start with a 12 percent refundable tax credit, he said, based upon property taxes paid, and it would be capped at 30 percent with a 2 percent increase each year leading up to that.
Based on the average Nebraska home price of $150,000, Ricketts said, the credit from LB947 is limited to $230 the first year and would increase by about $50 per year.
For agricultural land, there’s no dollar limit for the credit and would follow the same trend as the 30 percent cap for homeowners.
“By doing that, we can focus those dollars on Nebraskans,” Ricketts said. “Right now, anyone that owns property, even those big out of state landowners, gets our property tax credit relief fund. What this would do would be a refundable tax credit based upon the property tax credits you pay and is only eligible for Nebraska residents.”
It’s a work in progress he said, and would provide about $4 billion in property tax relief over the next 10 years.
The workforce development side of the bill is still being worked on, he said, but the legislation would provide $10 million for workforce development programs. Those could include funding things like job training and the Internship Nebraska program.
Farmers and ranchers in Nebraska are facing a dire situation, Ricketts said, and LB947 is aimed at keeping agriculture the largest industry in the state. Ricketts said some farmers are paying two to four times more property taxes per acre than their counterparts in Missouri, Kansas, Iowa or South Dakota.
Ricketts said that Nebraska farm incomes are expected to go down another 7 percent this year. While it might not be enough to immediately turn things around for Nebraska farmers, it’s what can be structured and managed within the budget.
“We can't have our farmers leaving our state and going to other states,” he said. “We need to make sure we're competitive here so that we can continue to have a strong ag economy.”