With less than a month before the Nebraska Legislature begins its 2020 session, the Grand Island Chamber of Commerce held its annual Legislative Kickoff Wednesday at First National Bank.
Gov. Pete Ricketts participated, along with state Sens. Dan Quick, Curt Friesen, Steve Halloran and John Lowe. Several dozen members of the public were present to hear officials’ comments.
The governor and state senators spoke about their legislative priorities for the upcoming session. Next year’s session will last only 60 days, with lawmakers focused on issues such as ongoing property tax relief and a new economic incentives plan. Nebraska’s current incentives plan, the Nebraska Advantage Act, expires in 2020.
The new incentives plan will be designed to bolster economic development in the state. A proposed replacement is LB720, which is labeled ImagiNE Nebraska. It would simplify the tax credit process for participating businesses and increase transparency for requirements, along with targeting high-paying jobs.
But with Ricketts and many lawmakers placing a high priority on property tax relief, having enough money to adequately fund LB720, along with meeting outstanding obligations of the law it will replace and making another sizable contribution to property tax relief, is a significant dilemma.
Adding to the pressure, if lawmakers fail to come up with a property tax relief plan, it opens the door to a property tax ballot initiative that seeks to mandate lower Nebraska property taxes by sharply cutting state revenue.
The ballot initiative is a result of ongoing concerns from farmers and ranchers about increasing property taxes. The measure would provide all landowners with a state income tax credit equal to 35% of their annual property tax bill. It would cost the state an estimated $1.5 billion in 2021, nearly one-third of its general fund budget.
While the lawmakers at the chamber event Tuesday said they would rather see a legislative solution, several said they would support the ballot drive if progress is not made to cut property taxes during the upcoming session.
Ricketts spoke first Wednesday, followed by the lawmakers, before the program was opened up for questions from the public.
The governor talked about his administration’s vision to grow Nebraska, better prepare youths for the workforce, make government run more efficiently, control government spending and promote the state across the country and in foreign lands.
Ricketts touted the state’s economic success, saying Nebraska has had more economic development projects than North Dakota, South Dakota and Kansas combined.
Contributing to that success, he said, are Grand Island companies such as Hornady Manufacturing and Chief Industries. He also mentioned the upcoming $95 million expansion of the community’s JBS beef packing plant.
“When companies invest in our state, they are creating jobs for Nebraska families,” Ricketts said.
He also cited other business accolades that Nebraska has received nationally, recognition that he said is used to recruit businesses to the state.
When it comes to providing property tax relief, Ricketts said the state must first control spending so that there’s money to subsidize property tax bills.
“There is no silver bullet,” he said, when it comes to controlling government spending.
“If you keep your expenses flat and let your revenue grow, you have profit,” Ricketts said. “That is how we deliver tax relief.”
He said before he became governor, Nebraska’s budget growth was at 6.5% per year, but that was not sustainable because it was above the state’s long-term revenue growth of 4%.
During the last six years, Ricketts said, Nebraska’s average rate of growth had been less than 2.4%.
With higher projected revenues for the state forecast over the next two years of $260 million, he urged lawmakers to manage those increased revenues sustainably and apply the revenue to property tax relief instead of spending it on additional government programs.
“Anytime you add more money to spending, it just keeps compounding into the future,” Ricketts said. “We will have to tell all those special interest groups no more spending as the additional money will be going to tax relief. We have to control our spending to have tax relief.”
When it comes to passing a new incentives program to replace the old one that expires next year, he said that it is a priority if Nebraska wants to remain competitive with other states in recruiting new businesses.
“We need an incentive program so companies will look at our state to expand and invest in,” Ricketts said. “This is an opportunity for us to review our incentive program and make sure we are transparent and accountable and create higher-paying jobs. This is an opportunity to improve it.”
But he said he doesn’t expect the incentives program to go anywhere until lawmakers make progress on property taxes.
“That is why property tax relief is important to get done during this next legislative session,” Ricketts said.
During the senators’ comments, Quick said he has several legislative goals for the upcoming session, such as raising the age at which people can use vaping products to 21, passing a clean indoor air act, increasing funding to public health districts and his land bank bill that would allow any municipality in Nebraska to join an existing land bank — a tax-exempt political subdivision that acquires, manages and develops vacant and tax-delinquent properties — under the Nebraska Municipal Land Bank Act. Quick said land banks could address a lack of affordable housing and rehabilitate properties that private companies cannot take care of, some of which are unsafe eyesores with broken windows and sprawling weeds.
Friesen said one of his priorities would be to work on increasing accessibility to broadband technology in rural areas.
As rural areas in Nebraska continue to see a population decline, he said, better access to broadband would help in economic development, along with improving services, such as education and telemedicine.
Friesen also expressed concern about passing meaningful property tax relief as farmers and ranchers have seen a 156% increase in property taxes in recent years, compared to 15% to 20% for commercial and residential properties. Nebraska has the second-highest property taxes on agriculture in the nation.
What concerns him is whether there will be the 33 votes needed. While he said there are a lot of ideas to cut property taxes, not taking action will lead to the public passing an initiative that forces lawmakers’ hands. He said he would support such a public initiative if lawmakers fail again to pass meaningful property tax relief.
Friesen also expressed concerns about passing a new economic incentives plan, especially if property tax relief efforts fail to pass.
Halloran said he supports the public initiative on property tax relief and is confident that lawmakers will find a way to make it work if the initiative passes, such as creating a new tax code for the state that looks at new ways to collect revenues, such as a consumption tax. A consumption tax is a tax levied on consumption spending on goods and services. Consumption taxes are usually indirect, such as a sales tax or a value-added tax.
Lowe is supporting legislation that would lower taxes for retired military veterans. Both Lowe and Ricketts also expressed concerns about a public initiative that would legalize marijuana because of the possible health concerns that come with psychoactive marijuana consumption, especially as new breeds of marijuana are becoming more and more potent.