COLUMBUS — State Sen. Paul Schumacher set the bar pretty low for the current legislative session as lawmakers are expected to spend a significant amount of time on the budget and tax proposals.
“I wouldn’t look for any significant legislation during this year’s session,” Schumacher told a group of about 35 community leaders attending Monday's legislative breakfast hosted by the Columbus Area Chamber of Commerce.
“It’s going to be a rather subdued session,” he said. “It’s déjà vu all over again, we’re short of money. There’s no easy answers to this problem.”
The 66-year-old attorney predicts state finances — primarily a roughly $200 million projected revenue shortfall over the current two-year budget cycle — to be front and center again during the 60-day session that started Jan. 3.
This is Schumacher’s eighth and final year as the District 22 senator after serving two four-year terms.
Gov. Pete Ricketts, who already ordered a hiring freeze for all state agencies under his control and temporarily reduced the amount of money agencies receive each quarter, is confident the budget can be balanced without raising taxes.
He introduced a proposal last week that would provide relief for Nebraska property taxpayers and cut the state's personal and corporate income tax rates.
The governor's plan, unveiled during his State of the State address, would restructure the way the state provides property tax relief by offering refundable income tax credits to owner-occupied households in Nebraska and agricultural landowners who live in the state. Landowners who reside outside Nebraska wouldn’t receive the credits.
Eligible property owners would receive a credit on their state income taxes equal to 10 percent of the tax bill on their home or farm. The credit for homeowners would be capped at $230.
Additional property tax relief would be pumped into the program in the future during years when state revenue exceeds forecasts. Ricketts estimates the program would provide more than $4 billion in property tax relief over the next decade.
“I think we’re going to hear a lot of tax relief talk,” Schumacher said during Monday's breakfast, adding that the truth is the state is not generating the tax revenue it needs to pay the bills.
“There is no easy way to pay for tax relief,” he said.
The Columbus senator said the state’s financial situation was much stronger in the 2011-13 period when grain prices were high and agricultural land valuations were on the rise. Grain prices reverted to more normal levels in 2014, but ag land values have remained high.
The state should have been investing that revenue windfall, but instead gave it back in the form of tax rebates, Schumacher said.
Public education, overcrowded prisons, gaps in rural mental health services and an aging baby boomer generation will all compete for more state funding in the years ahead, he said.
“There are no magic solutions,” Schumacher said. “I’m not terribly optimistic about where we’re going or where we’ve been.”