It appears that the Nebraska Legislature has begun the dangerous slide down the slippery slope of becoming like Kansas, thanks to the efforts of Governor Deep Pockets and his Gang of 29 cheered on by the Americans for Prosperity.
Governor Pete Ricketts has been touting it (LB461) as the 2017 Nebraska Taxpayer Reform Act. “Tax reform is a key component to Grow Nebraska,” Ricketts said even before debate began on the floor of the Legislature. Some ag producers and the state Chamber of Commerce and a handful of business groups have also spoken in support of the bill and its promise to deliver tax relief to Nebraskans.
While Ricketts was handing accolades to Revenue Committee Chairman Jim Smith of Papillion and Ag Chair Lydia Brasch of Bancroft and freshman lawmaker Steve Erdman of Bayard – all three members of the Gang of 29 – another group was waving the caution flags trying to stop the runaway train. You remember the Gang of 29, those lawmakers who got together last December before the session started and decided who was going to chair the committees and how they were otherwise going to “run the table.”
Opponents have said it is irresponsible to be talking about a bill that will cut taxes for the wealthiest and raise taxes on some middle-income families at a time when the state faces a large budget shortfall that will result in cuts to services on which Nebraskans rely.
Spokespersons for nonprofits, the teachers’ union, public employees union and at least one farm organization have joined to form an opposition group called Rebuild Nebraska. More than 20 organizations in the group said they want to rebuild Nebraska’s families, communities, businesses, schools, infrastructure, and workforce though a stable, sustainable, and progressive tax system.
Some state senators, who obviously fear that their opposition will be met with Ricketts’-financed opposition to their re-election bids, have been silent on the issue. That tactic was used in the most recent election and has been eroding the non-partisan basis of the one house Legislature.
It’s a complicated bill that would change the way agricultural land is valued to an income-based approach and change income tax rates and personal exemption amounts and use economic growth projection rates to trigger income tax cuts.
Lincoln Senator Kate Bolz, a member of the Appropriations Committee, said since actual revenues often fall short of projections, a tax cut in a down year could put the state in a budget bind. She said the bill just isn’t responsible fiscal management.
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Her Lincoln colleague, Senator Patty Pansing Brooks, said the plan as presented would grant sizable tax breaks to wealthy Nebraskans while leaving only a "crumb" for low-income people. Rural senators have remained split on the issue. Some have spoken highly of the plans to revamp ag land values while others say the proposal does too much for income tax cuts and not enough for property taxes.
Rebuild Nebraska member Anne Hindery, CEO of the Nonprofit Association of the Midlands, said the tax system should protect middle-class and low-income families while making sure we have a stable revenue source for our state. She said the proposed tax plan would place a greater burden on families who are already struggling, potentially creating a greater demand for direct services from nonprofits.
Nebraska State Education Association spokeswoman Karen Kilgarin said the state is already 49th in the Nation in the proportion of state aid for K-12 Education. The proposed massive tax cut would make it nearly impossible for the State to provide adequate and necessary funding for K-12 as well as higher education, she said, adding that school districts would likely see drastic cuts in state aid.
Ricketts said tax reform is a key component to Grow Nebraska with lower taxes for families and to grow the economy. He maintained that the 2017 Nebraska Taxpayer Reform Act will do that.
Count me among the skeptical. On its face, tax reform is something that is decades overdue. But tax reform in a time of revenue shortfall is biting the hand that feeds you. Remember, the state gets its money from taxes. Cut the taxes and you get less money. Simple, right?
It was the support of the Americans for Prosperity that pushed me over the edge. That’s the so-called “Tea Party.” These are the folks who pushed for change in neighboring Kansas and in Oklahoma where public schools can only afford to be open four days a week. To them I say, butt out.
It’s our problem and something that a truly non-partisan Legislature could fix, given the freedom to act without undue political pressure from the executive branch and a group of nationally known political bullies.