Gov. Pete Ricketts called closing a state budget gap the top priority of this legislative session and said existing tax credits can be used to lower property and income taxes.
Ricketts, during his State of the State address, told lawmakers his administration has already taken steps to curb spending in light of the Nebraska Economic Forecasting Advisory Board’s projection that state revenue will fall $173 million short of expectations.
“While our state’s economy once again has the wind at its back, our revenues continue to fall short of the board’s expectations,” Ricketts stated during the speech in the legislative chamber. “We’ve been preparing for this. We’ve reduced our state workforce by 500, or about 4%. We’ve eliminated 1,500 open positions. In preparation for budget cuts, we reduced agency allotments by about 2% over the last two quarters of the year.”
While much of government would be cut under the governor’s budget proposal, some segments would be spared.
“I am proposing across-the-board reductions of 2% in this fiscal year and 4% in the next,” Ricketts stated. “Consistent with our work, I have designated priorities for funding in the budget, like K-through-12 education, Corrections, and services to help the developmentally disabled,”
The governor recommends the Unicameral make $103.2 million in cuts to the state General Fund, $77.1 million coming from the across-the-board cuts. His mid-biennium budget adjustment recommendations include a transfer of $108 million from cash reserves and $21.7 million from various cash fund balances.
The budget recommendations include a request to increase child welfare programs by $54.8 million. The governor said he will form a task force to investigate why child welfare program costs have increased.
Despite the budget woes, Ricketts proposes a $240 million tax cut package; a revamp of sorts from the package which failed to clear a filibuster last year.
“Cutting and reforming taxes is key to growing Nebraska,” Ricketts stated. “Over the years, together, we have done the hard work needed to hold the line on taxes, but Nebraskans need and expect more.”
Ricketts proposes using money already allocated to the Property Tax Credit Relief Fund to provide $200 million in property tax relief for agricultural and residential property as well as $40 million in cuts to individual and corporate income taxes.
“Tax relief will need to be a bipartisan effort,” Ricketts said to applause. “And it will be something that we all do together for the good of our entire state. Let’s roll up our sleeves and get the job done.”
AUDIO: Gov. Pete Ricketts delivers the annual State of the State address to the Unicameral. [30 minutes]