Session Preview: Nebraska governor’s last lap

Nebraska Gov. Dave Heineman (Courtesy Nebraska Governor's office)
Nebraska Gov. Dave Heineman (Courtesy Nebraska governor’s office)

By the time he leaves office next year, Nebraska Gov. Dave Heineman (R) will have been governor for just shy of 10 years, longer than any of his 38 predecessors. But before he contemplates retirement, the quiet politician who won his first full term by beating popular former Cornhuskers head coach Tom Osborne for the Republican nomination is thinking about padding his legacy.

Heineman will spend his last legislative session, which begins Wednesday, pushing through a series of tax reforms. In an interview last month, he cited property taxes and income taxes, both of which are higher in Nebraska than in nearby neighboring states.

“We are going to work very hard to create a better tax environment out here, particularly as we try to recruit higher-paying jobs,” he said in December. “We look good in all your generic business rankings, but the one area where we still need improvement is the tax situation.”

From our story in December:

Heineman said he would push the state legislature to cut the top personal income tax rate from 6.84 percent to below 6 percent. A large percentage of Nebraska families qualify for that top rate; the rate kicks in for income over $54,000 a year for a married couple filing jointly, and the average household income stands at $50,695, according to the Census Bureau.

“That’s just not competitive with our neighboring states, not competitive really in today’s modern economy,” Heineman said.

Heineman will also push to lower the property tax burden, which his state’s agriculture industry complains places too big a burden on their businesses. While property tax rates are largely the domain of local jurisdictions, the state controls property valuation.

Heineman said the legislature could reduce the valuation of agricultural land, currently assessed at 75 percent of its actual value, to as low as 65 percent. Property tax relief can also come from a special fund that gives direct reimbursements to property owners.

Both tax cuts would be paid for by the state budget surplus, which a state economic board estimated at $81 million earlier this year.

On Monday, two state senators unveiled their plans to cut income and property taxes. One of the plans would include annual reductions of the state’s income tax, along with a slew of other cuts, subsidies and exemptions. Another would include a sales tax exemption.

Nebraska’s unicameral legislature, which this year marks 80 years as a nonpartisan, single-chamber body, is also likely to take up prison reform and alternatives to Medicaid expansion. State Sen. Kathy Campbell (R), the prime backer of proposals to expand the state’s Medicaid system, said last month she would cobble together aspects of proposals from other states that have won bipartisan support before she reintroduces her bill.

Expanding Medicaid would mean an additional 54,000 low-income adults in Nebraska would receive coverage. Last month, a legislative panel began looking at programs being operated in Arkansas, Iowa, Michigan and Pennsylvania, all of which became law under Republican governors or legislators.

Campbell’s plan to expand Medicaid was stymied by a legislative filibuster last year; Heineman also opposed her plan.

“I continue to oppose [expansion],” Heineman said in the interview. “Regardless of how you feel about expansion, here’s the bottom line that I keep coming back to: It’s too expensive.”

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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Reid Wilson | January 7