Key senators cite drawbacks in governor's tax, health care and prison proposals

Some state senators see drawbacks in Gov. Dave Heineman’s proposals dealing with tax cuts, health care and reforming “good-time” practices in state prisons, three major goals he said he wanted the Legislature to accomplish this session.

Sen. Health Mello of Omaha, chairman of the Appropriations Committee, said he is especially worried about the long-term effects of Heineman’s tax plan, which would lower income taxes by 6 percent and and lower agricultural land valuations by 10 percentage points. With the governor in his last year in office, the Legislature would be left to deal with the consequences, whatever those may be, Mello said.

He cited Kansas, which cut taxes last year and is now trying to dig itself out of a financial  hole, as a state Nebraska should not seek to emulate. Nebraska’s large education budget could suffer as well, Mello said. And he warned against using one-time money to cut taxes for the wealthy.  

“Long-term fiscal health is at risk, as well as the health of the middle class,” Mello said. 

Sen. Galen Hadley of Kearney, who is head of the Revenue Committee, said it’s clear that Heineman is serious about tax relief in the state, but he also had several critical questions he wants the Legislature to cover before it makes any major decisions. Those questions are: What is the appropriate amount of money to have in the rainy day fund? What are the ongoing consequences of tax relief? And what can the Legislature really do about property taxes, which are levied by local jurisdictions?

Hadley said he doesn’t have the answers to those questions right now, but he said they will be answered this session. He urged senators to be logical instead of emotional when talking about the issue. The Legislature needs to make sure the state can afford to cut those taxes, he said..

“When you make tax changes, you want to be right,” Hadley said.

Hadley headed a study last year that concluded Nebraska property taxes were too high.

Another big-ticket item on the legislative agenda this session is the expansion of Medicaid. Heineman is opposed to the idea, saying that if the Legislature cuts income taxes, it will help by giving individuals more money to take home.

Health and Human Services Committee Chairwoman Kathy Campbell of Lincoln, however, said expanding Medicaid to cover those not covered by the Affordable Care Act has many advantages for the state. She said she thinks her committee and the Legislature will lean that way despite the urgings of Heineman. The proposed expansion would cover individuals ages 19 to 64 who are childless --  or as she said, “those who are left behind.” She said the plan is tailored to fit Nebraska and doesn’t directly match any other state’s plan.

In addition, she said the expansion would bring more money to the state. At a minimum, it would bring $423 million to Nebraska because of the federal government contributing 90 percent of the cost. And she would like to see that money come into Nebraska instead of to neighboring states such as Iowa.

The third point Heineman made in his state of the state address is that practices governing “good time” for prisoners need reform. Three years ago, Heineman pushed for inmates to be awarded more good time to save the state money in the long run by reducing the prison population. However, he changed course on Wednesday, saying it needs to be harder for violent criminals to get good time.

Sen. Bill Avery of Lincoln said programs that allow inmates to be released need to be improved. The main problem, he said, is that there isn’t funding for those programs, so inmates are being released into society without being any better off than when they entered prison.

According to Sen. Brad Ashford of Omaha, the Judiciary Committee, has a bill that would add $15 million to prison programming.

Ashford, who chairs the Judiciary Committee, said Heineman is confused about how the system works and that he won’t let the governor’s views get in the way of what the committee accomplishes this session.