LINCOLN — A new, moderate think tank said Wednesday that Gov. Dave Heineman's tax-cut plan wrongly sends more than $20 million to $26 million in income tax cuts to nonresidents.
An official with the Lincoln-based OpenSky Policy Institute said Wednesday that the state can't afford to cut taxes this year because of the still-fragile economy but that if a tax cut is going to happen, it should only benefit Nebraska residents.
"Instead of enriching non-Nebraskans, we should reinvest in education, infrastructure and health care here in our state," said Renee Fry, the executive director of OpenSky.
Fry said $20 million would, for instance, finance the expansion of the nursing facility at the University of Nebraska at Kearney and the Veterinary Diagnostic Center at the University of Nebraska-Lincoln.
The governor's proposal, Legislative Bill 970, would cut personal and corporate income taxes and eliminate inheritance taxes. He has said the cuts are needed to help hard-working, middle-class Nebraskans; help attract businesses; and improve the state's business tax climate.
A spokeswoman for Heineman said Wednesday that the governor would have no comment about the think tank’s report. Sen. Abbie Cornett, the bill’s sponsor, hadn’t had time to read the report and declined to comment.
OpenSky opposes the package, saying the state cannot afford it until the economic recovery is more clear and complete.
Fry said states typically cut taxes when they have a budget surplus, not when they're facing a projected $660 million budget gap in two years.
Nonresidents who would benefit by Nebraska income tax cuts would include those who live in Iowa and work here and those who live outside the state and derive income from owning farmland, commercial property or part of a business here. Between 7.2 percent and 9.5 percent of the people who pay Nebraska income tax live outside the state.
Fry said the state could target a tax cut to residents only by offering it as a one-time, sales tax rebate.
Other states have used such a rebate to deliver tax relief, she said, adding that it would cost millions less than the governor's plan while injecting money into the economy.
The OpenSky Policy Institute formed last year with the stated mission of providing impartial research that promotes financially sustainable, long-term growth of the state. Its board members including Warren Buffett's grandson, Howard W. Buffett; former State Sen. Joel Johnson of Kearney; and Lincoln businessman Dick Campbell, who is married to State Sen. Kathy Campbell.
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