January 31, 2007
Dear Fellow Nebraskans:
In an age of technological marvels, new educational challenges, international competition and entrepreneurial opportunity, creating dynamic 21st Century jobs for the next generation of Nebraska families must be a priority. Our vision must be focused on preparing our state to compete in the 21st Century.
One reason that I am so enthusiastic about this legislative session is because of the opportunity we have to make Nebraska an even better place for our sons and daughters and their families. To accomplish this, we must be willing to face the challenges ahead.
We must address the high tax burden that’s been placed on middle-class Nebraskans, farmers, ranchers, small business owners, and would-be entrepreneurs. We must address our water challenges. We must also secure a more reasonable and sustainable rate of government spending. I am optimistic that the ability to overcome these challenges and others is within reach.
We must first address the disproportionate tax burden on our citizens. In order to compete in a changing economy, we must be committed to easing the tax burden on Nebraskans. Ensuring that businesses can create jobs requires a determined and sustained commitment to both reforming our income tax system, and providing property tax relief.
LB 331, the tax relief package I’m pursuing, would provide more than $475 million dollars in income tax cuts over the next two years aimed at middle-class families, in addition to providing the much-needed reform that would make our state more competitive and more attractive to businesses looking to expand.
The bill seeks to modernize and streamline Nebraska’s income tax system by reducing the number of tax brackets, lowering tax rates and eliminating the marriage penalty, as well as repealing the remaining sales tax on construction labor and eliminating Nebraska’s estate tax. The bottom line is that middle-class families with an adjusted gross income of over $50,000 pay taxes at the same rate as our wealthiest residents. That is a fundamental flaw in our tax system, and it’s something we cannot wait to address.
In my State of the State address to the Legislature, I said to the members of the Legislature that our residents are willing to make difficult spending decisions, and that as their representatives, we should be equally committed to the task.
The budget I’ve proposed is a conservative and responsible plan that restricts state spending growth to an average of 3.8 percent over the next two years, which is a far more reasonable rate than the 5.4 percent average growth seen over the past decade. I am hopeful that we can lead by example by passing a budget that restricts spending.
While my budget proposal includes $2.4 billion for property tax relief through aid to local schools and governments, in order too truly control property taxes, state and local governments need to work more closely together, and I intend to encourage locally-elected leaders to restrain spending and control the growth of local property taxes.
We also need to do a better job of planning ahead for the challenges that await us with regard to water. My budget proposed the establishment of a new Water Resources Cash Fund to ensure that the state, in coordination with local water users, agricultural producers and federal agencies, begins to put money aside in order to address the challenges we will face when it comes to water management.
If we act now and are successful in moving Nebraska down the road to a more vibrant and dynamic economy, all segments of our state will grow. We will have created a better climate for business owners and entrepreneurs, and working families will find better jobs.
We need to transform our high-tax state into a place where more Nebraskans can afford to raise a family. We need to create new and expanding job opportunities, and we need to provide a climate that encourages businesses to grow. I believe that we have historic opportunities before us, and I believe that the time has come to act.
If we are successful in addressing these issues, we will have set our state on a course that will ensure that the next generation of Nebraskans inherits a vibrant and thriving state.
