Wednesday, December 07, 2005

Choose Your Tax Cut Poison

by Kyle Michaelis
Gov. Dave Heineman released his tax cut proposal. Details follow:
Reduce the state income tax to its 1997 level, about a 3 percent reduction. Heineman estimates it would save the average family of four earning $55,000 about $120 over three years.

— Eliminate the 5.5 percent state sales tax on home construction and home repair labor at estimated savings of $99 million from July 1, 2007, through June 30, 2009. Those services were made subject to sales tax in 2003.

— Lower the current lid of $1.05 per $100 of assessed property value for schools to $1.025 next fiscal year and $1 the following year. Current law doesn’t call for the drop to $1 until the 2008-2009 fiscal year. The state would contribute an additional $174 million to make up for the drop in local tax revenue for schools. Heineman estimates that a homeowner would save $125 over a three-year period for every $100,000 in property value.

That amounts to about $420 million in cuts over three years. Responses to the propoosal have varied from polite acknowledgement by state senators to childish derision a la Dave Nabity. The Lincoln Journal-Star reports:
State senators didn’t immediately stamp it with their approval, saying they needed to comb through its details first. They may not have any to scrutinize until next month, when Heineman plans to release them as part of his budget recommendation.

The two candidates trying to unseat Heineman as governor, meanwhile, criticized the plan.

While a “step in the right direction,” the cuts should be deeper and tied to a plan to reduce state spending, said U.S. Rep. Tom Osborne.

“I’d hope we could do better than that,” Osborne said. “Not addressed here are things that could be done to significantly decrease state spending"....

Strong state coffers — a forecasting board predicted in October the state would get an additional $262 million over the next two years — is expected to make many senators willing to consider cuts.

Omaha businessman Dave Nabity, a Republican candidate for governor, panned the Heineman plan as “form but not substance” that relies too heavily on faith that revenues will continue to grow....

“How about 40 bucks a year over three years?” Nabity said of estimated savings for a family of four earning $55,000 under Heineman’s plan. “Whoopty-aye-yay.”

Ahhh, to be so rich that $40 doesn't mean a damn thing. But still, regardless of Nabity's slap in the face to Nebraska's working families, Heineman's numbers don't add up.

A $420 million reduction in tax collections over 3 years vs. a projected budget surplus of $260 million over the next two means, on average, at least another $30 million has to be cut from somewhere while the costs of providing health care and education sky-rocket and numerous state-owned buildings stand in disrepair.

I'll "whoopty-aye-yay" to that.

Obviously, Heineman and his gubernatorial opponents are willing to say anything at this point. They seem willing to promise whatever will get them the most votes without completely bankrupting the state under their supposed watch (and Nabity, in his desperation, hardly even considers that). That leaves the common sense of our state senators our last true hope for responsible government (historically, not always a wise gambit).

From them, it's clear that Heineman's tax cut proposal won't be the only one of its kind. Already, longtime Lincoln Senator David Landis has made his own proposal of an approximate 50% cut in vehicle taxes not only more noticeable but also reaching a broader cross-section of Nebraska citizens.

At least, the Landis proposal has a bit of flexibility attached to it should the state's economy suddenly face a significant down-turn. Heineman, Osborne, and company seem happy to play in a magical world of unicorns and fairies where no such possibility exists (just as they similarly disregard the coming health care/medicaid crisis that haunts our every step).

I don't know where it all ends. I don't know where it should. But, remember that it's always a lot easier promising money back to the voters than it is saying where the required spending cuts are coming from. Until I hear the latter, these promises are just more politically-motivated drivel.

More proposals will come, as well they should. Each of our state legislators - having actually been elected rather than appointed and then stumbling into the job like Heineman - have the right and the duty to be heard in setting the immediate course for the state budget. As more facts and proposals unfold, the lay of the land will become much clearer and, hopefully, the reasonable course thus far avoided by the GOP candidates for governor shall surely reveal itself.

"No taxes without representation. No tax cuts without meeting our a great society and as thoughtful, compassionate human beings."


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