By Renee Fry
The writer is executive director of the OpenSky Policy Institute.
Speaker Jim Scheer, when announcing that the Nebraska Legislature’s session might end early, told lawmakers that they had worked hard this session and had “done a great job.”
Indeed, legislators have made significant progress on many fronts this session, particularly in relation to Nebraska’s property tax and tax incentive discussions. Lawmakers are currently considering solutions to these important issues that could balance competing viewpoints in a way that truly helps the state.
If lawmakers continue with the thoughtful and deliberate approach they displayed this year and heed this newspaper’s advice to work collaboratively, Nebraskans can be optimistic that policymakers will forge solutions that comprehensively address vital issues. One pitfall that could prevent this from happening, however, would be surrendering to a false sense of urgency as the session winds down.
While it is true that lawmakers are on the clock in terms of addressing our high reliance on property taxes to fund K-12 education and enacting a new tax incentive program, it is also true that they don’t have to pass substandard legislation just because the session is ending.
The Revenue Committee made promising strides this year in crafting a plan to lower property taxes by increasing state support of public education. In this way, the committee heeded the 2013 Tax Modernization Committee’s top recommendation when it came to legislation that would reduce property taxes. The Revenue Committee’s proposal to find new revenue to fund the K-12 aid increase would allow the state to offset its reliance on property taxes while at the same time protecting funding for health care, public safety and other services Nebraskans need.
Finding agreement on the specific revenue raising and funding distribution mechanisms, however, will take time and input from stakeholders who will be affected by the plan. A recently proposed measure to tax more services in order to increase the property tax credit fund would provide Nebraskans with some additional property tax relief this year. Lawmakers could then use the interim to get input and buy-in from stakeholders and return next session with a comprehensive proposal to address an issue that has frustrated Nebraskans for decades.
State senators also have had a productive discussion regarding a proposed tax incentive program to replace the Nebraska Advantage Act, which sunsets Dec. 31, 2020. Tax incentive programs play an important role in Nebraska’s economic development strategy, but legislative studies revealed significant concerns regarding Nebraska Advantage. The lack of clear program goals make it hard for senators to determine whether it is working and, in some cases, the cost of creating jobs is alarmingly high. A recent Legislative Performance Audit study found it cost the state up to $208,000 in forgone revenue to create a single job under the program. In debating the proposed new program, Legislative Bill 720’s ImagiNE Nebraska, lawmakers have discussed adding caps to stabilize the budget impact of the program as well as enacting other measures to help the program meet best practices. Work remains, however, to reach consensus on a plan that adequately addresses various concerns around the measure. Again, the end of the session presents a good point for lawmakers to step back and start interim work that will allow them to return next session ready to pass a fiscally sound incentive program to replace Nebraska Advantage.
Lawmakers don’t have to make rash decisions about these or other proposals that may come up in the session’s waning days, which is good, as hasty decisions often lead to undesired outcomes. Rather, they can use the session’s end as an opportunity to assess where things stand and what steps need to be taken to ensure the great work they did this year bears fruit and strengthens our state into the future.