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Panhandle senators: Legislators must address rainy-day fund, property taxes

January 5, 2019

SCOTTSBLUFF — With the new session of the Nebraska Legislature getting underway Jan. 9, the Legislature’s Planning Committee has made it clear – the state’s rainy-day fund needs to be restored.

The committee’s final report covering the 2017-2018 biennium concluded with what it said was an urgent, single primary recommendation: “Restore the rainy-day fund to two times an average month’s revenue and, absent significant deterioration in the state’s economy, do it over the next two biennial budgets.”

The report added that over the past two biennial budget cycles, the state’s cash reserves were almost halved, from $700,000 to $300,000. And it occurred during relatively good times.

“Right now, we have about a 22-day operation cushion,” said District 47 State Senator Steve Erdman. “We tell our kids to put money aside and not live paycheck to paycheck. That’s what the state is doing now.”

Erdman added that in the recent past, the state hasn’t made any significant cuts in spending, just borrowing from the rainy-day fund, cash reserves and doing other creative accounting to balance the budget.

“I don’t know of another way to cut taxes than to cut spending,” he said. “We’re not willing to do that.”

District 48 State Senator John Stinner serves on the Planning Committee and provided much of the commentary in the final report.

“We’ve depleted the rainy-day fund to a point to where it’s not serving as much of an economic cushion,” Stinner said. “With so many unknowns in today’s economy, the need for that cushion becomes greater and greater.”

In past years, the rainy-day fund has been used for renovations to the state prisons, a levee around the Strategic Air Command base and $50 million to start the infrastructure bank.

“The rainy-day fund has a dual purpose because the state can’t borrow money,” Stinner said. “Many times we have projects and initiatives when we need to have the fund available. About 54 percent of the spend-down in the rainy-day fund was for one-time projects. Building it back up will be a high priority.”

Stinner said that during the 90-day long legislative session, much of the time will be taken up putting together a new biennium budget.

“This won’t be a robust budget,” Stinner said. “Medicaid expansion will cost about $50 million, so I don’t expect to see any bills that require new funding to be passed. That’s four years in a row where we don’t have funding for new projects.”

Erdman said coming with a new budget will be a challenge because the state is currently looking at a projected $95 million shortfall. Somewhere along the way, senators will need to look at property tax relief again.

“I have a bill drafted that’s similar to the new petition drive for property tax relief,” Erdman said. “It would reduce property taxes by 35 percent. I’ll introduce that as a constitutional amendment.”

He said the petition drive continues to get the measure on the ballot in 2020 if property tax relief doesn’t happen through the Legislature.

“We’re also working on a change in how ag land is valued for property tax purposes,” he said. “Our goal is to change from the market approach we now use, which I think is obsolete and broken. We’re the only state in the region that uses the market approach.”

The change Erdman wants to see is to a soil productivity approach, where ag land is valued on its ability to produce.

jpurvis@starherald.com

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