LINCOLN — Gov. Dave Heineman said Wednesday he is still fully committed to obtaining $130 million-a-year in income tax cuts for individuals and corporations, despite growing worries in the Nebraska Legislature about whether the state can afford it.
If state lawmakers control state spending at the historic growth rate of 3.2 percent, Heineman said in a telephone press conference, the state can afford the multimillion-dollar cuts, as well as fund some construction projects at the University of Nebraska.
The governor suggested that passing a tax cut would help win passage of a proposed constitutional amendment to increase state senators' salaries from $12,000 to $22,500.
"If they want a pay raise, they ought to provide tax relief for hard-working, middle-class families," Heineman said.
The Legislature's Appropriations Committee gave preliminary approval on Tuesday to spending $71 million, mostly on NU construction projects. It includes $35 million for a new cancer research tower on the Medical Center campus in Omaha.
Heineman had initially criticized the spending on the cancer center, then recently said he might be OK with partial funding for the intial $50 million request.
He said Wednesday that it was hard to comment on the preliminary decision by the committee but that lawmakers ought to figure in his tax cut proposal first, then decide how much money is left for other state priorities.
According to state fiscal officials, if adjustments for state aid to schools are figured in along with the governor's proposal to spend $17 million on the state's troubled child-welfare system, there's only about $23 million left to spend on new programs or tax cuts.
That's a much smaller number than lawmakers had anticipated and would mean that Heineman's tax-cut plan would create a budget deficit, which would require cuts in other state spending to afford.
It all sets up a March showdown between state lawmakers and the governor over what should be the state's top spending priorities.
Heineman also announced he will lead a trade mission to China from July 28 to Aug. 3. The mission will includes stops in Beijing, Xi'an and Shanghai. The University of Nebraska-Lincoln has established a relationship with a university in Xi'an.
China is Nebraska's fourth largest trading partner. Exports to China were $380 million last year, an increase of $101 million from 2010.
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