LINCOLN — Gov. Pete Ricketts sat down with The World-Herald last week to talk about the 2018 legislative session and take a look at the road ahead. Here are the highlights of the discussion.
Q. Give me your overall assessment of this legislative session. Some folks said it was disappointing and even dysfunctional.
A. I think we need to remember it was a short session and there was quite a bit we accomplished. Obviously, the budget was key because we have to live within our means ... and we have balanced the budget without raising taxes. ... We are still investing in important areas and priorities like child welfare, corrections, people with developmental disabilities and so forth.
Of course, we also got the Title X language in there (which bars federal family planning money from going to agencies that perform or refer women for abortions). So that was a major accomplishment to close that $200 million gap and get us back into balance without raising taxes.
... We had a number of areas where we got legislation passed. (Ricketts named bills reforming the State Patrol, streamlining speed limits, curbing opioid abuse, creating direct primary care, improving reading and offering commemorative certificates for miscarriages.)
... Finally, we made some progress on taxes. We got (Legislative Bills) 1089 and 1090 passed ... making sure we don’t see our businesses, farmers and ranchers see a big spike in their personal property tax bills, and ... restoring that $134-per-person exemption so that we didn’t see broadly a $200 million tax increase.
Certainly the biggest thing we did not get done was property tax relief ...
Q. Is property tax relief something that the Legislature needs to do every year?
A. ... It’s not a one-and-done kind of thing, but we have to make progress. That’s where the Legislature has really failed these last two years.
Last year we offered up the idea of doing the income potential assessment to change the way we value agricultural lands. This year it was this refundable tax credit. We had broad support for that refundable tax credit. ... We just didn’t get that threshold of 33 votes in the Legislature to get that done.
Q. The speaker (of the Legislature) at the end tried to put everybody in a room to negotiate some sort of compromise, and they were unable to reach an agreement. In your assessment, what went wrong with trying to get something done on property taxes?
A. ... There was a small minority of senators who were insisting on raising taxes to be able to accomplish this, and you cannot raise the tax on one Nebraskan to pay for another Nebraskan’s tax relief. That’s not tax relief, and that ultimately is what caused this all to fail.
Q. From what I’ve heard, the folks who were negotiating, there was agreement on some increase in the sales tax to offset the increase in property tax credits, but there was one holdout. Is that something that you’re not willing . . .
A. There’s a difference between compromising on a bill and compromising on a principle. ... If you look at the development of LB 947 (Ricketts’ tax proposal), ... we were willing to compromise, but not on the principle of raising taxes.
Q. What about the corporate income tax cut? Would you have been willing to move that bill forward without any change in the corporate income tax?
A. We have to have a broad-based bill to get to 33 votes and ... that bill that Sen. Smith and I worked on was an attempt to get that broad base of support. When I was talking to senators, I said, hey, I’ve got three principles with this: Whatever you come back with can’t raise taxes, it’s got to fit within the budget and you’ve got to bring more votes to the table. ...
Q. So, in your mind that included a corporate tax cut?
A. That was something to try and bring some of our urban senators on board. If you recall where we ended up on that bill, it was 10 to 1 property tax relief to the other parts of that bill, the business tax cuts and the workforce development . . .
Q. Of course there are folks who have criticized you for insisting on that corporate income tax cut, and saying that’s because ... your family would benefit.
(State Sen. Bob Krist, who is seeking the Democratic Party nomination for governor, said Ricketts squandered the opportunity to solve the property tax problem because of his insistence on the corporate income tax rate cut. Based on Securities and Exchange Commission filings, Krist estimated that the cut would have meant a $13 million reduction in state taxes for TD Ameritrade, the company founded by Ricketts’ father.)
A. I think that specific attack is a political attack, Martha, and you and I both know that. ... Again, as that bill developed, ... that all got de-emphasized.
Q. There are folks who are convinced that it’s not possible to achieve significant property tax relief and properly take care of state needs without looking to some other source of revenue, whether that be closing loopholes and exemptions or raising cigarette taxes. ...
A. LB 947 laid out the plan for how to get to significant property tax relief; a 20 percent refundable tax credit based upon the property taxes you pay is significant. It would have more than doubled what we’re doing with regard to property tax relief right now. ...
If you look at how we were structuring this, over the last 20, 30 years, our average state revenue growth is about 4-5 percent. We were committing to that tax relief and we required less than a percent of growth to be able to manage that. So we would have absolutely been able to manage how we were going to achieve that 20 percent tax credit and still be able to do all the things we need to do to provide our state services. ...
Q. You’re now faced with a situation in which the Legislature did not do property taxes, there’s this petition drive out there, where do you go from here?
A. We’ll continue to work with senators and other groups to come up with ideas that we can work on to be able to deliver property tax relief as we move forward. I don’t have those ideas right now. We just got done with the session, but we’ll regroup and rethink this and come back with more ideas.
Q. ... What role do you plan to play with this petition drive? Are you going to be out there speaking against it?
A. As the governor I think I’ve got some limitations what I can say about it, but if people ask me I will tell them that I think it’s a bad idea, that if you’re talking about a $1.1 billion impact to our budget, that’s 25 percent of our budget. ... You can see the amount of disruption it’s going to cause, or massive tax increases.
Q. ... Anything else you’d like to add?
A. I think that kind of covers the session. Again, there was a lot that we got done for a short session, the budget being the key thing, and our work is not done. We’ve got more work to do, especially on property taxes ... but we’ve got a lot to be optimistic about here in Nebraska.