By Governor Pete Ricketts
May 15, 2017
The Governor’s official photo is available here.
For many months, Nebraska has experienced declining tax revenues. Since last year, I have been working to constrain spending in my agencies in preparation for budget cuts. In the first part of this year, the Legislature and I worked together to make cuts for the current fiscal year.
Since then, the Legislature has continued to work on the next two-year budget. As they worked on the budget, I urged spending restraint because state revenues have continued to deteriorate. Just a few weeks ago, the board responsible for predicting state revenues lowered projections, and last week the Revenue Department announced that tax receipts fell short $55 million in April. And that’s just in one month! Nebraska’s revenues have come in below what forecasts predicted 14 of the last 22 months.
Because tax revenues continue to worsen, we must take new, responsible steps to tighten our belts. Last week, the Legislature sent over the next two-year, $8.9 billion general fund budget for my consideration. The budget I received from the Legislature did not constrain spending enough in light of declining revenues, and included a gas tax increase and a risky budget gimmick.
Rather than constraining state spending, the Legislature attempted to raise the gas tax and take the money out of the Roads Department to spend on other parts of state government. Over the past two years, I have been clear that I oppose increasing the gas tax because it hurts working families who can least afford a tax hike. We are already one of the highest taxed states in the country. As of January, our gas tax was 27th highest in the nation with more increases coming in future years under current law. Increasing it more would only worsen our tax climate which has the fifth highest property taxes and 14th highest income taxes. Tax hikes make it more difficult to grow Nebraska.
Additionally, the Legislature decided to lower the minimum reserve in the state’s checking account, rather than making needed cuts. The minimum reserve provides the cushion in our checking account critical to protecting the financial integrity of the state. Lowering the minimum reserve would be similar to a family spending the cushion in their checking account on non-emergency spending. It should be avoided at all cost.
To prevent a tax increase and protect the budget, I have vetoed a total of $56.5 million over two years. These are thoughtful and measured reductions, which protect important priorities. Here are a few key facts you should know about my vetoes:
- They reduce various state agency appropriations by a half of a percent (0.5%).
- They include an $11 million line-item reduction to State Capitol renovation funding that is not immediately needed.
- Some programs and agencies are excluded, including those already reduced by 3 percent or more.
- The budget, after line item vetoes, protects the property tax credit relief fund, Corrections reform, public safety, and state aid to K-12 schools.
While $56.5 million over two years may not seem significant in the scope of an $8.9 billion budget, senators will be lobbied hard in the coming days by special interests. State agencies and special interests with state contracts will spend significant effort and time to persuade your senator not to make these modest and responsible cuts to the budget.
If you want to see senators sustain my vetoes, make these cuts, and put the budget on firmer financial footing, they need to hear from you. I have already been meeting with senators to urge them to sustain my vetoes, but the voices of working Nebraska taxpayers like you need to be heard in this discussion. You can make a difference. Visit www.NebraskaLegislature.gov to find your senator’s phone number and email address.
Last week, Unicameral Speaker Jim Scheer announced that the Legislature plans to adjourn on May 23rd. The budget is the last major issue the Legislature has to consider for this legislative session. I will continue to work with senators in these final days to constrain spending and balance the budget without raising taxes. As always, I hope you will contact me if you would like to share your thoughts on this issue or any other. My office can be reached at email@example.com or 402-471-2244.