Neb. urged to do more than cut

LINCOLN — A coalition of nonprofit groups that serve the elderly, children and the poor called on Nebraska leaders Monday to consider increasing taxes and fees as part of the solution to the state’s budget woes.

The coalition suggested that the state first needs to clearly define its priorities, then use a “balanced approach” of budget cuts and “smart revenue streams” to resolve the state’s expected $679 million budget gap.

Representatives of the nine groups told reporters they don’t want to see a repeat of budget cuts adopted during the last economic downturn, in 2001-03, that seemed to focus heavily on cutting government-funded services for the poor and elderly.

“We don’t want to repeat that cycle,” said Kathy Bigsby Moore of Voices for Children Nebraska. “Many of those cuts were not fully restored. What we’re trying to say is ‘Do not return to that cutting discussion without looking at revenue enhancements.’ ”

The idea of tax hikes didn’t sit well with Gov. Dave Heineman and three state senators involved in the budget-writing process.

Heineman, in a prepared statement, said he was opposed to tax increases and was “disappointed” that groups such as the Nebraska Appleseed Center for Law in the Public Interest and AARP Nebraska “would want to increase taxes on Nebraska’s middle-class families and senior citizens.”

State Sen. Lavon Heidemann of Elk Creek, who heads the Legislature’s Appropriations Committee, said he wasn’t ready to consider higher taxes or fees as part of the solution.

Heidemann said the Legislature is trying to take a more balanced approach to budget-cutting this time by asking every legislative committee, from Judiciary to General Affairs, and Transportation to Education, to suggest reductions in state spending.

Overall, he said, he appreciates entities that want to be part of the solution, such as the University of Nebraska, which is holding back on faculty pay raises, and questions local school districts that are giving teachers generous raises.

Omaha Sen. Heath Mello, a member of the Appropriations Committee, also said he’s not ready to raise state taxes. He would rather see the state “reinvent,” streamline and possibly merge some state agencies.

Nebraska has been one of the few states that has avoided tax increases in dealing with the drop in tax revenue caused by the recent recession.

But next year’s expected budget gap will be the largest yet, and there’s plenty of talk in the State Capitol that the next round of cuts will slice away at the muscle and bone of state services, not just fiscal fat.

Some proposals have been floated in the past couple of years to eliminate some of the growing number of sales tax exemptions; the state now exempts more sales from taxation than it taxes. Ag chemicals, seeds, various kinds of machinery and lottery tickets escape sales taxes, and about 400 new sales-tax exemptions have been granted since the state adopted a sales tax in 1967.

Mark Intermill of AARP Nebraska said the state’s looming budget situation is too big to solve solely through budget cuts. He said that approach could hurt Nebraska families and blunt the state’s economic recovery.

Medicaid, for instance, generates $1.50 in economic activity for every $1 spent, Intermill said. The governor has already signaled that the rate of growth in Medicaid spending is a concern that must be addressed.

Intermill said solutions can be creative, noting that a reform of Medicaid spending on the elderly resulted in less money spent on that group last year than in seven previous years.

What kinds of revenue enhancements are the nonprofit groups talking about?

Becky Gould of the Lincoln-based Appleseed Center, which advocates for the poor, said it was too early to say. She said the nonprofits, including the Center for Rural Affairs and the Nebraska wing of the National Association of Social Workers, just want to be part of the conversation.

Intermill said AARP has traditionally supported expanding the sales tax base to increase revenue by taxing services.

Gould emphasized that there’s a range of options besides tax increases to increase revenue, such as fee increases, but that overall, the nonprofit groups feel that in the past the state has not set solid spending priorities before trimming spending.

Sen. Mike Flood of Norfolk, speaker of the Legislature, said it was much too soon to talk about specific cuts or whether tax increases would be necessary.

On June 29, Flood will convene the first meeting of the Legislature’s special effort at finding spending cuts.

“At this time, we’re looking at spending cuts. No one in the Legislature is talking to me about raising taxes,” he said.

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