LINCOLN — Gov. Dave Heineman and University of Nebraska officials objected to a proposal to put $40 million more of state money into the university's cancer center project in Omaha.
Two Omaha lawmakers put forth the idea Friday, saying they want to replace the contributions promised by the City of Omaha and Douglas County.
“This is a state project. It ought to be paid for out of state money,” State Sen. Brad Ashford said. “The state ought to take the responsibility for funding its own education institutions.”
But NU lobbyist Ron Withem said the university is well on its way to pulling together the financial support for the $370 million project at the University of Nebraska Medical Center.
Sources of funding include the state, private donors and patient revenue, along with money from the city and county.
“We need to be realistic. The state has contributed very generously,” Withem said about the idea of increasing the state's share.
Jen Rae Hein, the governor's spokeswoman, was more direct in her response.
“The governor is opposed,” she said, adding that he was traveling and could not elaborate further.
Ashford, who is running for mayor of Omaha, said he plans to introduce legislation next year because he thought NU officials did not fully explain the project and its funding when they sought state support this year.
Omaha should not have been put on the spot to come up with $35 million or risk losing the cancer center, he said.
“I would have never voted for a project that required a city tax increase,” he said.
The City Council this fall approved a 3 percent occupation tax on tobacco to generate $35 million for the center. The 3 percent tax adds some 15 cents to the average price of around $5.10 for a pack of cigarettes.
A public vote was not required because the tax would raise less than $6 million a year.
The Douglas County Board voted to provide $500,000 a year for 10 years, for a total of $5 million. The money is to come from county inheritance tax revenue.
Omaha City Councilman Chris Jerram, who co-sponsored the city's tobacco tax ordinance, said the idea of getting state money is “highly speculative” and “a long way down the road” from getting approval from the Legislature and the governor.
Jerram said that if the Legislature fully replaced the local funding, he would look at whether the city needed to continue its tobacco tax ordinance.
But Jerram also said the local funding already is impressing philanthropic foundations and donors, and he'd hate to see “even the best-intentioned bill” scare off donors.
Ashford said his goals are to figure out what share of the project funding should be the responsibility of local governments and what should fall on the state.
He also wants to explore whether all pieces of the project are needed. He questioned the need for additional hospital beds, for example.
Ashford also said the state could potentially find money for the cancer center project by reducing the amount of sales tax revenue that is set to be put into road-building next year.
The centerpiece of the medical center project is a $323 million cancer center: a $110 million research tower; a $63 million, 108-bed inpatient center; and a $150 million outpatient center.
A $47 million ambulatory, or nonemergency, center would bring the total project cost to $370 million. That center would not be cancer-related.
Sen. Bob Krist said he plans to co-sponsor Ashford's bill, as well as introduce legislation setting stricter limits on occupation taxes, such as the tax imposed for the cancer center project.
“Where does it stop?” Krist asked. “It's the state's responsibility to fund the university and its programs.”
He said the bill would set out a legal definition for occupation taxes that would not include taxes charged at the point of sale.
His proposal also would specify how occupation taxes could be used and would impose a penalty for collecting more than $6 million a year from a particular tax.
A law passed this year allows cities to levy occupation taxes without seeking voter approval if the tax is expected to yield less than caps set out in the law. In Omaha, the amount is $6 million a year.
Krist said his proposal would require cities to reduce an occupation tax by the amount collected above the $6 million limit.
The Nebraska Legislature approved $50 million for the cancer center project as part of an $85 million capital construction package for higher education.
Along with money for the cancer center, the package included $15 million for a new nursing and allied health professions college at the University of Nebraska at Kearney and a first, $6 million payment on financing bonds for a new Veterinary Diagnostic Laboratory at the University of Nebraska-Lincoln.
World-Herald staff writers Jeffrey Robb and Leslie Reed contributed to this report.
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