Sunday, January 14, 2007

The 3/10ths Mandate

by Ryan Anderson
Some interesting spin in The Kearney Hub this week:
An inflationary lid [Initiative 423], the voters decreed, was not the answer to what has been perceived by most as a problem in Nebraska: High taxes. If the vote is interpreted as an endorsement of state budget increases that in recent years have more than doubled the rate of inflation, the Legislature will continue in the state of denial that we’ve seen since former Gov. Mike Johann’s budget vetoes were so handily overridden in 2003.

If, on the other hand, lawmakers recognize that three out of 10 voters were mad enough about taxes to put a constitutional clamp on spending and address this problem, Nebraska will have made real progress.
As of late, the state press corps has descended the depths of some pretty ridiculous hyperbole in an attempt to declare state spending the crisis du jour, but this Hub piece really takes the cake. Since when, pray tell, does 30% qualify as a popular mandate?

Read more of Ryan's "The 3/10ths Mandate"

If the lopsided, landslide defeat of 423 proves anything it's that the overwhelming majority of Nebraskans reject the Dave Nabity/Jon Camp doctrine of government by triage, where programs and services of vital import to the continued health of the state must fight amongst themselves for an ever shrinking trickle of funds descending from our outdated and ill-considered tax structure.

We are faced now with a budget proposal that would cut support for child care providers and eliminate food stamp and Medicaid services for legal immigrants. We rank 38th in the nation in teacher pay and 36th in teacher per student ratio. Our child welfare workers are crushed by massive caseloads and our state senators still earn a poverty wage. We are burning our furniture for warmth and making a mockery of our promise to invest in a future where people and ideas flow into Nebraska, not out.

When government isn't capable of adequately maintaining basic public services it should be obvious that the key to lowering taxes isn't placing further restraints on state spending. Our problems can't be solved by toppling strawmen, they require a serious examination of a tax structure that is as inadequate as it is unfair. This, of course, is not exactly Governor Heineman's strong suit.

The buck has been passed. Political prognosticators have forecasted that this Unicameral, deprived of many of its most prominent and experienced voices, would lack the independence of legislatures past and become mostly subservient to the will of the Governor and his strong electoral mandate. The legislature now has a rare opportunity to prove these critics wrong.

It's not enough, as the Governor proposes, to simply eliminate the estate tax and further flatten income tax brackets. That's not reform; it's butchery. Hopefully, real reform would end with property tax relief, a move which would ease a massive burden on Nebraska's middle class. But real reform must begin with a serious re-examination of LB 775.

The "Employment and Investment Growth Act" is a series of tax incentives and corporate give aways that was passed in a fit of panic in response to Omaha-based InterNorth's 1985 decision to merge with Houston Natural Gas and move south to Texas (forming the Enron corporation). Collectively, the benefits of LB 775 represent an estimated annual expenditure of $156 million, more than six times the amount disputed in the recent spat between the Governor and NU President J.B. Milliken.

For years there have been questions of LB775's cost effectiveness, its effect on small business and its contribution to the widening rural/urban gap, but endless rounds of debate have not resulted in any serious effort to seek reform. The time has come. If Medicaid, higher education and child care are on the chopping block then corporate welfare should at least be on the table.

The Hahn campaign provided us a model of how corporate welfare reform could be linked to property tax relief. But if Hahn's candidacy taught us anything, it's that having good ideas isn't enough. Heineman has the advantage of the bully pulpit and the press is on his side. The only way to compete is to work like hell. We can start, as Kyle suggested, by writing letters to the editor, contacting our state senators and telling our friends and family.

This may seem an impossible challenge, but it's unlikely our task will ever be easier than it is now. As LB775 demonstrated so clearly, once this tax "reform" is cemented in law it will become nearly impossible to reconsider. This may be our last, best hope. But it simply will not happen without your help.

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Blogger Kyle Michaelis said...

I agree with Ryan that, in the long-term, corporate tax breaks of the sort represented by LB775 and the Nebraska Advantage Act are a roadblock to our state's progress. Not only are they unproven in job creation, but they are also the very definition of a "tax shift" putting the state's burden squarely on the backs of working class Nebraskans.

But, no one's touching these corporate tax breaks this session. No one. Not going to happen. It's not even a relevant conversation. The legislature just passed the Nebraska Advantage expansion of LB775 and won't be touching it this year....or probably even while Heineman remains in office.

Our immediate focus must be preventing the further decimation of our state's tax base. We lack the political power, at the moment, to take on the corporate fat cats in their offices, but we still can and must win this battle in their homes.

Heineman has declared war on the working class. We must fight back and fight hard.

Blogger Eric said...

Yeah, and 44% of Nebraska voters chose a Democrat in their House race, so I'd say that the mandate for a Democratic House delegation is even bigger than the 423 mandate. That's got to entitle us to at least one seat right?

If you throw in the Senate race too, you'll see that 54% of votes cast for Federal offices were for Democrats. Certainly we should be able to argue that the Democratic Congress has a mandate from Nebraskans.

Blogger Ryan Anderson said...

"Our immediate focus must be preventing the further decimation of our state's tax base. We lack the political power, at the moment, to take on the corporate fat cats in their offices, but we still can and must win this battle in their homes."

I understand why Kyle feels this is too many birds to kill with one stone. But I don't see how you beat something with nothing. If we want to defeat Heineman's tax cut proposals, I think we have to unite behind a plan of our own, something more than a vague committment to deal with property taxes instead.

The Governor has a pretty compelling story to sell: state spending is out of control, but he's the strong chief executive who won't let himself get bullied around by career bureacrats like the president of a University system. This is the central message of yesterday's OWH editorial, complete with Jeff Koterba cartoon of Cowboy Heineman lassoing a loose bull named "State Spending":

In order to compete with this plan, we need to unite behind a proposal of our own with a similarly compelling story line. Call it "tax justice", if you will: the state's tax structure unfairly advantages the rich and Heineman's proposal is more of the same. We are fighting the fat cats for a fair and progressive tax system that will enable us to give middle class families property tax relief.

Our story, as you noted in your column, has the advantage of being true. But you can't sell a story that doesn't have a villain (hence the "tax and spend monster"). The villains here, indisputably, are the big business lobbyists who stretch the budget by demanding these regressive tax incentives.

Isn't that our alternative vision of what Nebraska is and what it should become? If we're serious about opening up a real debate on this issue, why don't we tell the whole story?

I don't see how we can get progressive tax reform without revisiting LB775. The money just doesn't seem to be there. And if Heineman's the only one with a plan and the only one with a story, there's no way to prevent him from dominating the debate.

Kyle might be right from a tactical standpoint, I certainly understand the dangers of cluttering the debate... especially when the deck is already stacked against us. I don't expect corporate welfare reform to actually happen this session, but I do think we need to unite behind an alternative proposal to have any chance of stopping the Governor's plan from going forth. This is just the only way I can see to make an alternative proposal work.


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