Gov. Dave Heineman devoted the majority of his final State of the State address to the Unicameral to a call for lower taxes.
The governor, rebuffed last year when he proposed a sweeping change in state tax policy, again called on legislators to cut taxes.
This year, the governor is refraining from a specific proposal. Instead of a call to do away with the state income tax in exchange for cutting about half the exemptions the state grants from sales taxes, Heineman outlined a proposal to free between $370 and 500 million for tax relief.
“Over the past decade, median family incomes in Nebraska have declined. Food prices are up, health care costs are increasing, and middle-class family take-home pay is down,” Heineman stated in his speech. “Here’s the good news. You can help Nebraska families. The Nebraska legislature can increase family take-home pay by lowering taxes.”
The governor suggested a reduction in the state cash reserve and prudent spending over the next three years could make as much as $500 million available for tax cuts.
Heineman told lawmakers they have studied the issue long enough.
“I appreciate the discussion that the Tax Modernization Committee had regarding taxes, but it’s time for the Legislature to act,” Heineman said. “We don’t need more time to study this issue. We already know taxes are too high and high taxes are detrimental to economic growth. It’s time for a straight forward conversation about property and income tax relief.”
The legislature last year created the Tax Modernization Committee to study the state tax system after passing on Heineman’s proposal to scrap the state income tax. Worries about whether the state could handle a reduction in state revenue and what unintended consequences might arise with such a drastic shift in the state tax structure kept lawmakers from pushing forward with the governor’s proposal.
Heineman wove the theme through his State of the State address that he has been pounding for more than a year.
“The bottom line is this: taxes are too high in Nebraska and we can do something about it.”
Heineman spoke for only 15 and a half minutes during his last State of the State speech before lawmakers. Slightly more than eight minutes was devoted to the call to cut taxes. The remaining six or so minutes were split between the governor’s rejection of Medicaid expansion and prison reform.
After outlining some of the troubles that have plagued the federal health care law, Heineman told lawmakers the state should resist calls to expand Medicaid under the law.
“President Obama and his White House political operatives are trying to pressure Nebraska into expanding Medicaid, but Nebraska will not be intimidated by the Obama administration.”
Heineman reiterated his contention that expansion would be too costly and relies on the promise of a federal government deeply in debt.
“We’ve researched and studied the Medicaid expansion issue carefully, thoughtfully, and methodically,” according to Heineman. “The responsible choice is to reject this optional Medicaid expansion.”
The governor called on state lawmakers to change the rules of incarceration for the state’s prisoners. Heineman pointed out he has taken executive action to allow corrections officials to withdraw good time for those violating prison rules in wake of the Nikko Jenkins case, in which Jenkins is accused of killing four in Omaha this summer after release from prison.
“Now, it’s up to you, the Nebraska legislature, to reform the ‘good time ‘law,” Heineman said. “The recent murders were a wake-up call for every one of us. The people of Omaha and the citizens of Nebraska should be able to walk the streets of their neighborhood without fear of being shot.”
As for the broader topic of prison reform, the governor called for cooperation to tackle prison overcrowding.
“The other critical crime issue that should be addressed involves sentencing reform and punishment. I’m prepared to work with the Nebraska Legislature, the Nebraska Supreme Court, the Department of Correctional Services, and the Council of State Governments in developing a long-term prison capacity strategy.”
The Department of Correctional Services has become a study of prison reform, expected to be completed by this summer.
AUDIO: Gov. Dave Heineman delivers the State of the State address to the Unicameral. [16 minutes]