January, 2017
Lincoln -- Governor Ricketts has offered his state budget recommendations for the coming biennium. Unsurprisingly, there are a lot of detractors. Higher education leaders say it will force up tuition; the Nebraska Farm Bureau says it does not offer enough property tax relief; the Chief Justice of the Nebraska Supreme Court warns that the budget is seriously inadequate for the judiciary and corrections. Those who work in foster care are concerned that the progress of the recent past will be lost and children will suffer badly for it.
Is there anything good about the budget recommendations? Yes, compared to what a Governor Heineman or a Governor Brownback might have offered.
• There are funds at least to start dealing with the corrections mess left over from the Heineman/Bruning years of neglect and misfeasance. Chief Justice Heavican is appropriately engaged.
• The income tax cuts in the budget are subject to a trigger; that is, they don't happen unless revenues meet their targets. Kansas Governor Brownback cut taxes recklessly, based on the theory (with scant empirical evidence to support it) that more, not less revenue would result from state tax cuts. It may take Kansas decades to recover.
• The budget uses the non-political Nebraska Economic Forecasting Advisory Board's revenue assumptions. Nebraska has been wise to create such a body and to set aside "rainy day" funds to establish boundaries for responsible budgeting. The Ricketts budget may dip too far into these funds, but at least what he is doing is transparent.
The discussions around the Governor's budget recommendations also provide an opportunity for serious reflection about Nebraska's cyclical and structural budget issues. Nebraska's economy is heavily dependent on agriculture, so much so that it rises or falls based on what Congress enacts in farm bills and approves in trade treaties. Which means that a Nebraska governor must be active on these issues at the national level to make certain that Nebraska's interests are represented. For example, do farm bills promote consolidation of farms and consequently depopulate Nebraska's rural areas? (Unfortunately, they often have.) This is too complex a subject for this discussion, but it seems like a bad move for U.S. Senator Sasse to give up a seat on the Senate Agriculture Committee. Did Governor Ricketts confer with him about this?
A structural problem in the Nebraska state budget is support for higher education. Per capita, Nebraska ranks among the highest in the nation in higher education spending. To oversimplify using a football analogy: Nebraska wants to play in the Big Ten on a Big Sky population. But it's not so simple to cut higher education spending once started. For my part, I think it is essential for taxpayers to keep up their support, especially for innovation and research in order to be able to guide the direction of these efforts toward ends that pay off for Nebraska and its economy. It is not a given that outside research dollars that might replace state tax dollars will be beneficial. Reseach integrity is even less of a given with outside funding.
So what might the legislature do in response to the Governor's budget recommendations? That could be a subject for subequent blog posts, but here is one suggestion. Deal with the corrections and human services part of the budget with a separate, additional revenue stream for a number of years until the state has recovered from the damage done in these areas by previous administrations (and legislatures). I'd raise so-called "sin taxes" on products that are not good for Nebraskans' health in any case (and where there may be behavioral, causal connections between the products and the issues the state is facing). Obviously this means higher taxes on tobacco and alcohol, on which taxes are currently comparatively low (41st and 35th in the country, respectively). Not so obvious: soft drinks, which research is showing are comparably harmful. Many of us remember the state cigarette tax hike to pay for Game and Parks projects, the Devaney Center, and the Beatrice State Home. It worked.
Such taxes would also be everyday reminders that the salvation of the state is watchfulness in the citizen, and when citizens are not watchful about how their state is being run, as was the case in corrections and human services, there is a price to be paid.
