Grow the economy and control spending. Earn more, spend less. These are basic principles of budgeting.
Controlling spending to achieve tax relief is the only sustainable way to get long-term tax relief for Nebraska’s families as well as for our state as a whole. When I entered office, the State of Nebraska’s spending was growing at an unsustainable rate. The budget was increasing 6.5 percent per year, outpacing average economic growth. I worked with Senators to slow spending to 3.6% in my first budget. The budget approved this spring, for 2019-2021, limits spending increases to 3 percent, including the voter-approved expansion of Medicaid.
As we have worked to control spending, the Legislature and I have successfully delivered property tax relief using economic growth. When I took office, the Property Tax Credit Relief Fund was $140 million a year. In 2015, we added $64 million a year. In 2016, we set aside an additional $20 million annually for farmers and ranchers. And this year, we added $51 million more, bringing the fund to $275 million a year in direct relief to Nebraska’s property owners. We’ve delivered this property tax relief by controlling spending and using the growth in revenue to provide tax relief for you.
With our economy growing, State Senators will have an opportunity to deliver additional relief. The Bureau of Economic Analysis reported that our state GDP grew 3.4 percent in the first quarter of 2019, outperforming the national average. This rise in productivity has led to an increase in state revenues. On the strength of our economic growth, revenues exceeded forecasts by $176 million last fiscal year. As a result, our state government has improved its financial position.
If we are going to leverage this financial discipline and economic growth into property tax relief, Senators will have to guard against the plans special interests have for your money. Some are already running to the media with their ideas on how to spend the increase in revenue. It’s important that the Senators who represent taxpayers resist the calls of special interests for new spending. The state has set its two-year budget, and government must live within its means so we can deliver significant property tax relief to Nebraskans.
While state government does its part to control spending, local governments also have to step up and do the same so Nebraskans see tax relief.
Vigilance of local government spending is especially important in Nebraska because our state has a localized system of government. For instance, Nebraska has far fewer residents than California, Arizona, or Massachusetts, but we have more counties than all of these states combined. Geographically, we’re a big state; Nebraska’s land area is 20% larger than all of the New England states added together. Yet our population is spread out in small towns and villages, so we have hundreds of municipal governments. In total, there are 2,336 local entities in Nebraska with authority to levy taxes! Because of this localized structure, counties, towns, schools, community colleges, natural resources districts, and cities have considerable influence over how our tax dollars are spent. This is especially true of spending on public education. Spending on our 244 K-12 public school districts is one of the largest government expenditures in our state.
I urge you and all Nebraskans to make sure your schools, city councils, and county boards are being wise with taxpayer money by talking directly with your locally elected representatives who make the decisions about property taxes. The legislative session at the State Capitol receives close coverage by the press, as it should. Elected officials need to hear from you and be held accountable. Yet, local property tax hikes often receive little publicity and pass largely unnoticed. Nebraskans don’t fully realize what’s happening until they get hit with a higher property tax bill.
If we are going to make progress on lowering property taxes, we must all work together to hold local entities accountable for how they spend Nebraskans’ hard-earned money. That’s why, earlier this year, I worked on LB 103 with the Legislature to ensure greater transparency on property taxes. This law will help cast light on tax increases from local entities like community colleges who—as a group—increased taxes 112% from 2008 to 2018. It’s also why I have proposed a constitutional amendment to cap the annual growth of local property taxes. This proposal is still pending in the Legislature.
If you’ve seen out-of-control spending from your local government, please let me know about it. You can email me at email@example.com or call 402-471-2244. As an inscription on the Nebraska State Capitol proclaims, “The salvation of the state is watchfulness in the citizen.” Together, let’s keep an eye on all levels of government to make sure they control spending.
Pete Ricketts is the governor of Nebraska.