As the Legislative session draws to its final days in the state of Nebraska, Governor Dave Heineman took one last opportunity to push for property tax relief, and tax cuts in the states budget. Saturday morning the governor held a press conference stating that he has used his line-item veto power to veto $65.3 million from the states 14-15 budget.
Besides $2.5 million earmarked to install courtyard fountains that were part of the original plans for the State Capitol, the Republican governor redlined $10 million from job training programs, $11.7 million to install new heating and air conditioning systems in the Capitol, and $7.5 million of the $17.5 million earmarked for deferred state park maintenance.
Other vetoes included $7.4 million for the Nebraska Supreme Court to, among other things, increase probation officer salaries, and $5.4 million to increase rates paid to providers of services to the developmentally disabled.
He said $25 million of his vetoes should be used to increase the state tax credits sent to property owners.
The vetoes by Heineman, who is in his last year in office, brought criticism from two members of the Legislature’s Appropriations Committee, which draws up budget proposals.
State Sen. Heath Mello of Omaha, the chairman, said Heineman was “playing fast and loose” with his budget figures. Mello said almost all of the vetoes were of one-time expenditures or fund transfers, not of ongoing spending that would allow a tax cut of $25 million.
Mello said the Legislature sought to finance neglected areas of state government such as parks, provider rates, heating and air conditioning systems and job training, while providing a “responsible” level of tax cuts.
“They are priorities that don’t fit on a bumper sticker,” he said.
A fellow Democrat, Sen. Jeremy Nordquist of Omaha, said lawmakers and Heineman simply disagree about the priorities of the state.
“Of course, no one wants to replace their heating and air conditioning system, but it’s a long-term fix that is needed,” Nordquist said. “He’s walking out the door and would prefer things that are a little more flashy.”
Sen. John Nelson of Omaha, a Republican on the Appropriations Committee, said he wasn’t surprised that the governor didn’t like the fountain project.
But the committee is seeking to play catch-up on priorities that were cut during the recession.
“These things aren’t going to get done if we have another recession,” Nelson said.
The Legislature had already approved a $25 million increase in the property tax credit program, pushing the total to $140 million annually. An effort to boost the increase to $45 million fell five votes short of passing.
Funding for the tax credit program has failed to keep up with rising land values. Adding another $25 million, as proposed by Heineman, would restore the credit program to about where it stood in 2008, when the owner of a $150,000 home received a $129 tax break. That is $30 more than the current credit.
Heineman said many of the spending proposals could be reconsidered next year and that too much money was being set aside for “special interests” and not enough for taxpayers.
Nebraskans, he said, have been “very clear” that property tax relief is their top issue, and lawmakers should try again to increase funding for the property tax credit program.
Heineman said his vetoes eliminate one of the arguments against a larger tax credit: that there wasn’t enough money in the budget.
“Almost every single senator ran for the Legislature saying they wanted to do something about property taxes,” he said. “Now’s their chance.”
Mello and Nordquist questioned whether the tax credit program was the governor’s priority, because he did not include additional funding for it in his initial budget proposals.
The vetoes set up a late-session showdown with the Legislature over spending priorities. Senators would have to muster at least 30 votes to override Heineman’s vetoes.
There are nine working days left in the 60-day session.
Lawmakers passed a two-year budget a year ago, but they regularly make adjustments in the so-called “off” budget year.
The main budget adjustment bill passed on a 40-8 vote, so conceivably there are plenty of votes to override Heineman. But sometimes lawmakers are reluctant to defy a governor in such a public way. So stay tuned.
The budget is a mix of spending from the general fund — mainly sales and income tax revenue — and from the cash reserve, the state’s “rainy-day fund” that helped bail out Nebraska during the recession.
The Legislature’s budget plan took $65 million from the cash reserve while leaving an estimated $697 million. Heineman vetoed about $39 million of the cash reserve spending, and about $26 million in general fund spending.
Mello has argued that it’s irresponsible to use one-time funds from the cash reserve to finance ongoing expenses like a tax cut.
Heineman agreed with many of the lawmakers’ recommendations, including $19.5 million per year of additional funding for water conservation projects; $10 million in funding for projects at Ponca State Park and Arbor Lodge; $4.7 million for developmental disability aid; and $3.2 million for early childhood education programs.
Heineman also vetoed $1.1 million from a water sustainability fund that he said was “earmarked” for Omaha’s sewer-separation project. That, he said, is a local project that should be financed with local dollars.
Mello, who has been seeking state help for Omaha’s billion-dollar sewer project for several years, disputed that any money had been “earmarked.”
A water-funding bill still under consideration by the Legislature would allocate 10 percent of the $11 million water sustainability fund to projects in Omaha, but Mello said the city hasn’t applied for the money and it hasn’t been approved for the sewer work, even though it could be.