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Governor looks to future in proposed budget
January 17, 2013 Jerry Purvis   

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Govenor Dave Heineman

After giving his State of the State address to the Legislature on Tuesday, Gov. Dave Heineman and Lt. Gov. Rick Sheehy traveled the state to unveil the governor’s new proposed budget.
Sheehy spoke for the governor at Western Nebraska Regional Airport, saying that according to the Tax Foundation, the nation’s leader in the 2013 state business climate is Wyoming. South Dakota is in second place. Nebraska lags at 31st. “Being in the bottom half of all states is mediocre, at best,” he said.

The stated objective of the governor’s proposed budget is to “make Nebraska more tax competitive to create more jobs and higher paying jobs by eliminating the individual income tax and the corporate income tax, or lowering rates for the individual income tax and corporate income tax.” The plan also calls for the elimination of $2.365 billion in sales tax exemptions.
Some of the benefits of the governor’s plan include no individual income tax for working Nebraskans, no taxing of small business income, no taxation of Social Security income, no taxation of military retirement income, no taxation of any retirement income and no corporate income tax.

Under the plan, all current economic incentives would be honored, there would be no taxing of additional services and it would be revenue and budget neutral.

Heineman’s goal with his budget is to “create a bold, innovative and strategic tax reform plan that will make Nebraska a Top Ten business tax climate state for the next generation of Nebraskans.”

In his address to the Legislature, Heineman asked how many members knew family or friends who no longer live in Nebraska because they can’t find a job here or couldn’t find the right career.

“Are we going to be satisfied with a mediocre tax system that won’t create the jobs of the future for our sons and daughters?” he asked state senators. “Or, are we willing to consider reforming the tax code so that we have a modern, simpler and fairer tax code?”

The Heineman budget includes five percent annual increases for State Aid to Education and Special Education. It also calls for a two-year tuition freeze at the university and state colleges.
Another of the governor’s big concerns is the costly impact on the state budget over the new federal healthcare law, which begins to be implemented this year.

“It will cost more than $170 million in federal and state funds over the next eight years to implement just the technology and administration required by the new federal healthcare law,” Heineman told the Legislature. “Even more significant, it will cost the State of Nebraska $72 million is new general funds in this budget for growth of the current Medicaid program as a result of President Obama’s new federal health care plan.”

Heineman said the state fared better than most during the economic downturn because of the state’s cash reserve, which helped the budget during that time.

As economic conditions begin to improve, the governor called for rebuilding the cash reserve from its current $384 million. His budget would build that up to $442 million by fiscal year 2016-2017.

How elements of the governor’s budget will be accepted by state senators will be played out over the next six months as the 103rd Legislature is in session.
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