Wednesday, June 28, 2006

Part 4: Reality Bites

by Kyle Michaelis

Did you support last year’s expansion of the state’s tax incentives for businesses – the Nebraska Advantage legislation?

I did not. I didn’t really weigh-in on that one way or another. I did talk to my Senator about that and a couple of other Senators. I don’t know if it was “an expansion.” That was the progeny of LB775, and overall I’m not in favor of these kind of continuing business incentives that continue to be aimed primarily at large businesses.

Now, here’s what’s interesting, and it’s a good distinction – Gov. Heineman has and will be flying around the state saying “Nebraska Advantage Act works. Look at all these applications we have in.” Let’s think about that. I’m a business person, and I know that when you launch any new enterprise…it’s a process. If it were the Nebraska Advantage Act that had generated these applications, we wouldn’t be seeing these sorts of applications coming in for another business cycle or two….

Here’s another thing. I don’t have the final reports done… but it appears to me that Nebraska - over the course of the last 20 years - is significantly in the hole with regards to these business tax incentives. What I mean by that is the net benefit of what we got versus what we gave. I think it reaches upwards of beyond a billion dollars, and – when I get those final numbers – we’ll be talking about those pretty significantly.

And, here’s the final thing – Nebraska, and all the states in my view, we are in an Economic Civil War right now…You can go on Google and look at it. There are companies that all they do is….site location where they’ll get the best deal, the state that will give them the most money.

Nebraska is at a significant disadvantage in that race because we are not North Carolina – we don’t have the population base. We’re not Florida – we don’t have the tourism dollars. We’re not Texas or Oklahoma with natural gas excise tax. We’re not Wyoming with mountains and mountains of coal. We’re not even South Dakota, which has significant federal dollars coming in with tourism to places like the Black Hills and Mt. Rushmore. We don’t have any of that….

We have to face facts. With that kind of setting, we’re not going to attract a Micron factory or a BMW plant – we’re not going to do that, so we have to look at what we can do.

The first thing we need to do is chart a new course in terms of tax incentives. That’s why I’ve been talking about “Earn, Learn, and Return.” I want to use these same kinds of incentives for small and medium-sized businesses, then [include] credits in the form of education credits so we get to double-up. One, we help businesses hire and retain new employees because their employees or children of employees can get education credits to help off-set the costs of sending their kids to school. Two, we get kids to go to school in the state, to state institutions. And, three – with the return part of it – we induce people to stay here….

That’s investing in people, and that’s what Nebraska needs to do.

The other thing that is quite significant is… appears that of all the jobs that have been created under these tax incentives over the last 20 years or so, the average wage is less than…9 dollars. Those aren’t family friendly wages. Those aren’t even student-friendly wages because of the cost of education.

So, all I talk about is reality. As Frank Zappa said, “reality is what it is”…..and “what it is” is just that – we didn’t get a good return, and any rancher or farmer knows that. And, we’ll be talking about that….I’m not going to let Gov. Heineman rush around, smile – he can do that at his barbeques…But, this state is in trouble. We either need to deal with it or not. That’s why I’m in the race…..

In general, you take a very proactive approach – say you’re not going to wait for studies. Yet, on this one issue [Consolidation of rural Class I schools], you have called, I believe, for a 2 year-moratorium -

4 year.

A 4 year moratorium on the consolidations. What is it about that issue in particular that demands we take a closer look at it?

Well, a couple of things. It’s one of those issues where it’s hard to retrace your steps. You run out of bread crumbs basically. Once you close those schools, it has a dramatic impact on the geography surrounding it. I’m all for efficiency, but efficiency isn’t the only value in life. Let’s face it; I think community trumps efficiency in the range of values. Once you start closing community centers like schools, then it’s difficult to reignite development….that’s why I don’t think we should be in a rush to close those schools.

The other thing is we haven’t looked at all the options, the creative options, to keep them open…including technology. Even this learning community idea that’s come out, that’s all physical-based instead of technological…

With almost 50 million Americans without health insurance, the Federal Government obviously does not seem ready or willing to really tackle the issue in any large-scale way. Instead, they seem to be leaving it to the states to perform as independent laboratories to find their own way to resolve it. Yet, in the majority of states…they’re pretty much doing nothing. In Nebraska, we’re pretty much doing nothing – it’s not a problem at all; it doesn’t exist. As Governor, would you allow Nebraska to do nothing on an issue of that much importance?

No, if you want to talk about moral issues, that, to me, is a moral issue….I would probably be more inclined to take the approach of what the Gov. of Arkansas has done, who’s a Republican by the way. I think he’s been very progressive and proactive in health care on a couple of things. Made a commitment that there be no uninsured children in the state. We have, depending on the numbers, 40 to 75 thousand uninsured children in the state of Nebraska. We, at least, ought to be able to make that commitment. If we can’t get there, if we can’t get medical insurance for their parents, we as Nebraskans ought to at least make that commitment. Some other states are doing that. - Arkansas. I think Tennessee is moving in that direction. Illinois is moving in that direction. That would be a good first step.

Secondly, the state needs to be just a good businessperson in the sense of negotiating the cost of pharmaceutical drugs. It is inconceivable to me that the state has never put out competitive bids for provision of pharmaceutical drugs and pricing in the areas where it has to pay for those: Medicaid, Health and Human Services, and so forth we just pay the bill. Maybe the state is the only institution big enough to actually bargain….

I also want to talk about the flip side of health coverage. Right now, it’s really sick coverage is what it is. It covers us for being sick and not taking care of ourselves….We need to be more about health and not just about paying for sickness…..

In the National Journal’s rankings of the gubernatorial contests, Nebraska right now ranks 36th – the safest in the country – what would you say they don’t know about David Hahn that’s going to surprise them in November?.....

I think it’s about Nebraska. They look only at numbers… They don’t look at the history of Nebraska. This is the state that nominated William Jennings Bryan as President four consecutive times. This is the state that catapulted George Norris to a very distinguished career as a progressive. He was a Republican and left the party and brought about things like REA and Tennessee Valley Authority and so forth. This is a state that has seemed to rotate out Republican and Democratic governors. So, there’s a very strong strain of independent thinking and I would imagine some would call it populist notions, and those don’t die out in one or two election cycles because those are things that people pick up from their families and they carry those notions forward. And, I grew up in Nebraska. I know that…..

The other thing is it’s not hard for Nebraskans to vote for a Democratic governor. They’ve done it time and time again. So, it’s not anathema - like “My God, we haven’t had a Democratic governor in 50 years, we don’t want to break the trend.” They break it all the time, and they do it quite willingly.

Now, the other side of it is that they don’t know me.... I didn’t get into this just to have a name on the ticket. I did it because I thought it was winnable – looking at the numbers I looked at, looking at a whole range of things. Secondly, I think we’re going to run a really smart campaign, maybe not the way that traditional campaign folks would do it, but – given my background in targeting and data analysis….they haven’t seen anything yet.

I hope they underestimate me. That would be a strategic advantage.


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