Heineman changes tune on cancer center

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In a breakthrough for a UNMC cancer center, Gov. Dave Heineman now says he thinks the state can provide funding for the project if its commitment is spread over a number of years.

"I think this is a very important project, and some state support is probably warranted," Heineman told The World-Herald. "The key is, can we work out a multiyear commitment so the state doesn't have to do it all upfront? Because we do need to protect our cash reserve for a future economic downturn."

Last month, University of Nebraska officials announced a $450 million Building a Healthier Nebraska initiative that called for four projects — two in Lincoln and one each in Omaha and Kearney. The centerpiece is a 323 million cancer research and treatment center on the University of Nebraska Medical Center's Omaha campus.

University leaders are seeking $91 million for the projects from the state's cash reserve. Of that total, $50 million would go toward the cancer center.

Heineman's first reaction to the initiative wasn't enthusiastic. "The university may have some good ideas about some future projects," he said last month, "but their request is very bad timing." The state's highest priority, Heineman said, should be passing tax cuts, followed by rebuilding the state's cash reserve fund.

Early this month Heineman compared the University of Nebraska to a wealthy special interest group with its hand out for taxpayer dollars. He said average Nebraskans had told him that with more than $1 billion in the NU Foundation, the university should be able to afford to pay for the cancer center project.

In a Friday interview, the first thing Heineman said was, "My highest priority in this legislative session is tax relief for hardworking middle-class Nebraskans. That's critical to Nebraska's future so that we can continue to compete for jobs."

But he also offered support for the cancer center project and the effect it's expected to have.

"This is clearly a project that could have a significant economic impact on Nebraska," he said, "as well as a very significant research impact well beyond Nebraska."

Dave Heineman

Heineman said that since last month he has discussed the project with UNMC Chancellor Harold Maurer, NU President J.B. Milliken and Omaha philanthropist Michael Yanney, who is helping raise private money for the cancer center. "I don't want to put words in their mouth," the governor said, "but several of them have indicated to me that they could work with a multiyear commitment."

Asked to comment on the Heineman interview, Milliken, in a prepared statement, said, "We have always maintained that the cash-flow needs of the projects could be met over time, as long as the commitment — essential to leverage private support — is made in this session."

NU officials look forward to working with Heineman and legislators, Milliken said. "Each of our four initiatives," he said, "meets an important need that promotes the health of Nebraskans and contributes significantly to economic development in our state."

The Omaha part of the project would include a $110 million cancer research tower; a $63 million, 108-bed inpatient cancer center; a $150 million outpatient cancer center; and a $47 million ambulatory, or nonemergency, center. The latter building wouldn't be cancer-related.

Maurer said last month that the project would require a year to 18 months of additional planning, with construction concluding four years from now.

Project backers say the cancer center would provide 1,200 new jobs, many of them high-paying, by 2020. It's expected to add $100 million per year in salaries and benefits to Nebraska's economy.

The jobs the project would generate are just one of its attractive aspects, Heineman said. "There's a lot of indirect opportunity there," he said. "You're going to have the construction jobs and all the other potentially new people moving into our state. They will have to buy homes ... I understand the opportunity and its potential."

In addition to the $50 million they are seeking from the Nebraska Legislature, project backers must raise $200 million from private sources. The Nebraska Medical Center, UNMC's hospital arm, would incur $120 million in debt. Hospital revenues, officials have said, would pay off the debt over many years.

Maurer, who has raised funds for several major campus projects, said the state's support is important. "When you go to a donor, the first thing they ask you is 'What is the state going to do for you?'" he said. "We're a state institution. They want to make sure that the state is willing to put some money into it."

Because it will take some time to raise the private money, Heineman said, the state funding could be tied to fundraising milestones. If the university raises half the money by a certain date, for example, then the state would fund the first half of its commitment.

"If the state's going to make a commitment and there was an understanding that it would be tied to (the university's) fundraising," Heineman said, "I think the people of Nebraska would be supportive of that concept."

State Sen. John Nelson of Omaha, who introduced the bill that would provide state funds to the cancer center, said he agreed with Heineman that lawmakers needed to protect the state's cash reserve. He also backed the idea of staggering the allocation of money for the project. But "not over an extended period of time," he said. "The next biennium (two-year budget cycle), I think. That would be an excellent solution."

Heineman has said he would like to see the state's cash reserve fund grow to between $500 million and $600 million. The cash reserve is projected to hit $414 million by the end of the current two-year budget period in June 2013.

The governor said some people in the state might suggest that all the money for the cancer center project should come from private sources. "I would think there would be more Nebraskans who say 'Maybe it ought to be a partnership, with most of the money coming from private sources, with the state contributing some.'

"My sense is that most people view the University of Nebraska Medical Center as a Nebraska asset," Heineman said. "It's bigger than Omaha. They do a lot for the entire state. I think that's why there's support for a project like this."

Contact the writer: 402-444-1109, bob.glissmann@owh.com

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