By Russ Pankonin
The Imperial Republican
Nebraska Gov. Dave Heineman visited the Imperial Rotary Club Tuesday to make his case for further tax relief for Nebraskans.
When it comes to property taxes, Nebraska ranks among 13 states with the highest property taxes, according to the Tax Foundation.
Nebraska also ranks among 16 states with the highest income tax rates.
Conversely, Nebraska has the third lowest unemployment rate in the country at 4.2 percent.
The business channel CNBC ranks Nebraska fourth among the best business-friendly states and the state’s population growth is ahead of the national average.
If Nebraska wants to continue to grow its economy and population base, “It needs a competitive tax climate,” Gov. Heineman said.
When it comes to property taxes, those get set by the local governmental entities, he said. The biggest portion of property taxes goes to support education.
Heineman sees two ways to help ease the property tax burden, the first being a property tax credit from the state.
The second comes in returning more state aid to schools. The governor quipped it would take a Ph.D., an accountant and a lawyer to figure out Nebraska’s current formula.
Heineman said a responsible formula would provide predictability and stability to school districts.
The formula needs to be simplified in a way where urban and rural schools can be considered separately.
The present formula, which is based around property valuations, hurts rural school districts when property values continue to climb.
That’s been the case in rural Nebraska over the last several years, Gov. Heineman said. With higher valuations, less state aid returns to these rural areas.
CCS Superintendent Dr. Brad Schoeppey told the governor the district relies very little on state aid. This year the district will receive less than $180,000.
Modern tax system
What Nebraska needs, the governor said, is a modern tax system. The present system dates back to 1960.
“We need a tax system that represents the future, not the past,” he said.
In the 1960s, the state dealt with regional and national economies. Today, it’s national and international economies that drive the state’s economy, Heineman noted.
The governor started the conversation of modernization during last year’s Legislative session, when he introduced a bold, new plan.
While it didn’t advance, the Legislature formed the Tax Modernization Committee last session to study the present system and possible changes.
The committee is conducting meetings across the state to get input from citizens. Heineman urged people to participate in the process. The committee will report its findings to the Legislature next session.
Sales tax exemptions will come under close scrutiny, he said. The exemptions total billions in lost tax revenue for the state.
He said people tell him it’s fine to address those exemptions. But then they say “just don’t touch mine.”
People can’t have it both ways, the governor noted.
Rural Nebraskans want relief from high property taxes while urban wage earners want lower income taxes, he said.
He remains hopeful the state can develop a tax relief package that addresses both rural and urban concerns.
Obamacare too costly to state
Heineman said the Affordable Care Act, known as Obamacare, is just too expensive and should be delayed at least a year. “Let’s get it right when we do it,” he said.
He said the emphasis of the program was placed on access to coverage, not reducing costs.
Just to implement the program will cost the state $170 million in state and federal funds over the next eight years, he said.
In addition, it will cost $225 million in new state general funds over the next six years to cover the growth of the current Medicaid program.
That’s money that could be going to education, he added.
He said a study by the Manhattan Institute shows people from 27 to 40 years of age will pay higher health care premiums, ranging from 225 to 280 percent increases.
He added the study shows Nebraska will be one of the hardest hit states by the new health care law.