LINCOLN — Legislative budget-writers halved their plans for boosting the state’s Property Tax Credit Fund as they wrapped up budget work Tuesday.
Appropriations Committee members voted 7-2 to add $26 million annually to the tax credit fund, bringing the annual total to $250 million.
The committee chairman, State Sen. John Stinner of Gering, who proposed the move, called it “responsible.” It was coupled with a decision to put $25 million during each year of the two-year budget period into the state’s depleted cash reserve fund.
But the move drew immediate condemnation from Gov. Pete Ricketts and Sen. Lou Ann Linehan of Elkhorn, who chairs the Revenue Committee.
“This decision ... sends the message that the Legislature would rather keep taxpayer money for future spending rather than give taxpayers the relief they have been asking for,” the governor said. “In a time when our farmers and homeowners need relief, it is wrong for senators to withhold property tax credits.”
Linehan predicted that the move would spark a major fight when the budget reaches the full Legislature.
“That sends a very bad signal,” she said. “The number one issue is property tax relief, and not just for farmers.”
Ricketts had sought a $51 million annual boost for the tax credit fund, along with legislation to set a minimum level for the fund. The Revenue Committee incorporated that amount into a property tax package that will have a public hearing Wednesday.
The Appropriations Committee had included the higher amount in its preliminary budget plan, but that was put together before state revenue forecasts dimmed in February.
Sign up for World-Herald news alerts
Be the first to know when news happens. Get the latest breaking headlines sent straight to your inbox.
Stinner said the committee could revisit some of its final budget decisions after getting updated revenue projections Thursday.
The projections will be the first to take into account how the March flooding and blizzards could affect the state’s economy. They will also incorporate the results of the April individual income tax collections.
Some committee members objected to the idea of scaling back the increase for property tax credits. Sen. Steve Erdman of Bayard said the committee had “spent money like a drunken sailor every day,” leading to the cash reserve being drawn down too far.
Others defended the committee’s work. Sen. Anna Wishart of Lincoln said much of the spending was required by state laws. She noted that the $26 million would represent an 11.5% increase in spending on property tax credits, larger than the increase in other budget items.
Wishart also said that, by funding property tax credits, the Appropriations Committee has done more for property tax relief than other legislative committees.
The property tax credit program began in 2007 with a budget of $105 million. State policymakers increased the fund repeatedly, until it reached $224 million in 2016. Money for the program comes from state sales and income taxes.
Stinner praised the committee’s budget, saying it “covered all the bases” and addresses the state’s major concerns. It represents a nearly 3.2% average increase in spending, compared to the 3.1% average recommended by the governor.
Included in the budget is money for two high-security prison units and to open more problem-solving courts, as well as paying for a just-concluded contract providing longevity raises for corrections employees.
It funds the voter-approved Medicaid expansion and boosts payment rates for Medicaid, child welfare and other service providers. It provides more funding for K-12 schools as called for under the state aid formula, although it phases in the increase over two years.
With the vote Tuesday, it also keeps the cash reserve fund at its current level. Without the infusion of money and with a $54.7 million transfer out for prison construction, the reserve would end up at its lowest level since 2005-06. It would have an estimated $278.8 million by June 30, 2021.
The budget bills are expected to go to the full Legislature by May 2, and debate will get underway the following week. The budget covers the two fiscal years ending June 30, 2021.
Meet the Nebraska state senators
Here are the 49 state senators of Nebraska's 106th Legislature. You can click here to find your state senator.