January 19, 2009
Dear Fellow Nebraskans:
Last week I shared a message of continued discipline when it comes to setting priorities for our state. While Nebraska is one of several states not currently facing a financial shortfall, there are seeing signs that the next few years could be challenging for us.
As we begin a new budget cycle, I have outlined several goals that are critical to maintaining services and the economic progress we have made in recent years.
During this time of national and international economic uncertainty, my focus is on four priorities essential to Nebraska’s stability and future growth. Those priorities start with ensuring there are no state tax increases on Nebraskans.
In the two year budget recommendations submitted to the Legislature, I proposed maintaining the tax relief enacted during the past four years and continuing the property tax credit program started two years ago by providing $230 million in tax credits to property owners in fiscal years 2010 and 2011.
Failing to fund this program would be a property tax increase on every home owner in the state. In an economic downturn, higher taxes places additional burden on our middle class families. This is a time for state government and our partners at the local level to tighten our belt and limit what we ask of taxpayers in our state.
It’s also important that state government provide additional funding for K-12 schools and higher education, preserve services for vulnerable Nebraskans and maintain a strong cash reserve fund.
I proposed investing an additional $100 million in K-12 school funding in the two-year biennium, more than $16 million for special education programs, an additional $25.6 million for the University of Nebraska, and a combined $4 million for state and community colleges. Funding for education accounts for 85 percent of the new funding in my budget recommendations, and brings the state’s support for education to a record $1.7 billion annually in the next biennium.
Another area we continue to support is the services that help vulnerable children and families. My budget preserves the safety net to these individuals and families in need by providing $1.2 billion in funding in each of the next two years to support assistance to the residents of our veterans’ homes, ensures health insurance for low-income children, and provides aid for elderly and disabled residents among others.
Finally, it is important that our state maintain a strong cash reserve fund to avoid future tax increases. Efforts to lower taxes and provide incentives that encouraged new business growth in our communities have provided additional revenue to state government. As a result, state government has a robust cash reserve fund.
I’m proposing using $40 million from the cash reserve in each of the next two years, and setting aside $200 million for liabilities that could come due in the midst of a statewide slowdown. From the potential of the state needing to replace federal funds at the Beatrice State Developmental Center, the possibility that water litigation could produce a bill requiring payment in the midst of a national slowdown, or our obligation to fund teacher and state employee pension losses due to a declining stock market; caution tells us we need to hold some portion of our cash reserve for unresolved issues still on the horizon.
Our hard work during the past few years has better positioned Nebraska to weather a financial storm. A fiscally-responsible state budget and a growing economy provided the savings that put our state in good condition today. As we look to the future, making difficult but wise decisions will allow our state to emerge stronger when our national economy improves.
