April 10, 2006

Dear Fellow Nebraskans:

I am pleased to be writing in the final days of the 99th Legislative Session, as it has been an intriguing, sometimes contentious, and always fruitful time. The end of each legislative session is a moment when it seems more work exists than can be done, but I am always amazed at how much your state senators accomplish.

I had the pleasure this last week of signing into law LB 968, the comprehensive proposal from the Legislature’s Revenue Committee to provide reasonable and sustainable tax relief to individual Nebraskans and their families. LB 968 will provide nearly $300 million over the next three years in targeted income, sales and property tax relief to working families. Most importantly, it takes $300 million from the hands of government before it can be spent.

This broad-based approach to tax relief was achieved thanks to Senators Pam Redfield of Omaha, Dave Landis of Lincoln, Ray Janssen of Nickerson, Bob Kremer of Aurora, Jeanne Combs of Milligan, Gwen Howard of Omaha, Tom Baker of Trenton and a host of others. The Legislature and I had a productive week, when LB 968 is combined with their decision to sustain more than $22 million of my line-item vetoes.

Tax relief and spending restraint were cornerstones of my pre-session State of the State address, because I believe that if Nebraska is to continue down this path toward greater prosperity – and I believe we will – we must make our state and its tax climate more competitive, and we must continue our commitment to Nebraskans and their families. I said at the time that our state was headed in the right direction, and we had a golden opportunity to keep faith with Nebraska taxpayers. I wanted the focus of this session to be meaningful and sustainable tax relief for individual Nebraskans.

Senators made significant progress on income taxes with bracket and earned income credit changes that will amount to significant relief for families trying to earn their way to self-sufficiency. The changes will also offset some of the deterrents for executives to pick Nebraska as a place they want to live, work and do business.

Another one of the bill’s vital components is the statutory reduction of agricultural land valuations from 80 percent to 75. The most difficult tax to attack at the state level is property taxes, because they are driven by spending at the local level. However, I believe that LB 968 marks an important step toward relieving the tax burden on the men and women who power agriculture, clearly our state’s most important industry.

A third part of this package – and a part that is near and dear to my heart – is the repeal of the sales tax on home repair labor. I am pleased that the Legislature has helped me abolish a tax inequity that targeted the people who care enough about their older homes to invest in routine maintenance and remodeling. Labor costs like hiring a plumber and roofing your house will be less expensive starting July 1 because of LB 968.

Another important part of this tax-relief package takes aim at a part of tax code that too often forces our senior citizens on fixed incomes out of their homes. The expansion of the Homestead Exemption raises the amount that seniors can exempt from property taxes, and it does the same for our veterans and the disabled. The expansion also recognizes that property is worth more than it used to be, and it raises the value of homes that will be eligible for the exemption.

Taken in totality, LB 968 is an important second step in an annual approach to tax relief, following on the successful heels of the Nebraska Advantage jobs-creation, economic incentive package, but I want you to understand that this journey is far from over. In order to realistically tackle both tax relief and spending restraint, we are going to need an intense focus on cutting what we can, when we can, as well as tightening the state’s belt to make it work.

We must never forget that the hard work of Nebraskans is the reason state government exists, and we must remember our responsibility to make government more cost-effective and efficient so that Nebraska families can keep more of the money they earn.