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  •   Business Pushes for Neb. Spending Cap

    The Ballot Battle

    By David S. Broder
    Washington Post Staff Writer
    Thursday, October 29, 1998; Page A23

    OMAHA Ed Jaksha has been battling the spenders for almost half his 83 years, leading the Nebraska Taxpayers Association in fight after fight against the politicians and lobbyists in Lincoln, the state capital.

    But this year, he has help. Several dozen of the state's biggest businesses and most influential executives have raised millions to promote a Nov. 3 ballot initiative that would drastically slow the rate of growth in Nebraska's budget and return to the taxpayers any surplus funds generated by its booming economy.

    As co-chairman of the Citizens for Nebraska's Future, which designed and is selling Measure 413, the spending cap, the down-home retired phone company employee puts a populist face on a measure whose muscle comes from the owners of the state's biggest businesses.

    Measure 413 is the most significant fiscal initiative on any state ballot this fall and the center of a battle that in money and media is drowning out everything else on the Nebraska campaign front. It has become the major issue in the gubernatorial election, even though the Republican candidate and likely winner has joined his Democratic rival in opposing it.

    Measure 413 is being vigorously opposed by a coalition of groups representing farmers, educators, senior citizens and union members, who claim it will damage the schools, diminish prospects for property tax relief and funnel millions into the hands of its big-business backers. The latest polls show the initiative in trouble.

    For Jaksha, capping taxes and spending has been a 40-year campaign, marked by more losses than victories. "I kept harassing Walter Scott Jr. [chairman emeritus of Peter Kiewit Sons Inc., the Omaha-based construction giant] and Bill Henry at First National Bank to put a stop to all this spending," Jaksha said over coffee and eggs at his favorite snack bar. "But I'd have to say they have really taken the leadership. They loaned me the attorney to draft the petition, and of course, they've raised the money for the campaign."

    A financial report early this month showed Kiewit-related companies and individuals have put up almost one-third of the record $2.7 million spent by the sponsoring committee. First National has contributed $230,000 and lent another $301,000. The opposition group reported raising about one-quarter as much, with the teachers' union its main source of funds.

    Scott, who contributed $80,000 personally, took the lead in forming a coalition of 49 CEOs, along with the Omaha and Lincoln chambers of commerce, who claim the unicameral legislature, nominally nonpartisan but controlled by Republicans, has gone on a wild spending spree in recent years.

    "Our population has been absolutely stable at 1.6 million," said Bob Ball, president of the Omaha Chamber of Commerce, "but our state budget has been doubling every 10 years. That is not sustainable. Businesses look at our budgets and taxes and decide to go elsewhere."

    The budget has been growing at a compounded rate of almost 10 percent a year, jumping 12 percent in the current biennium. But opponents of 413 say much of the increase has come as a result of a bipartisan decision to shift some of the burden of school financing off local property taxes and onto the more rapidly growing state income and sales tax base.

    Education is by far the biggest item in the budget and, in the past decade, the state share of overall education spending rose from 24 percent to almost 50 percent. But property taxes, after inflation, also rose slightly, leaving Nebraska in the middle of national rankings of per capita tax burdens, though higher than some neighboring states.

    The 3,525-word amendment limits annual spending increases to the inflation rate multiplied by the growth in population or (for school districts) enrollment. It allows the legislature to suspend it for emergencies and to adjust it upward for unfunded federal mandates. It can be overruled by popular referendum or, after five years, by a three-fourths vote of the legislature. Otherwise, any revenue accruing to the state beyond those spending limits must be returned the next year by reducing sales and income tax rates.

    The education community, from the University of Nebraska down to local school boards and PTAs, has denounced the measure as a threat to students. Nebraska University President L. Dennis Smith warned that effects would be "devastating," forcing big increases in tuition and eventually threatening a shutdown of at least one of the four campuses. But proponents scored a public relations coup by getting Kathleen McCallister, president of the elected state board of education, to make an ad assuring voters that "it won't hurt schools."

    That was resented especially at the Lincoln headquarters of the Nebraska State Education Association, where the opposition effort to 413 is being run. Its co-chairmen include Sen. Bob Kerrey (D), Rep. Bill Barrett (R), Helen Boosalis, former mayor of Lincoln and national chairwoman of the American Association of Retired Persons, and the heads of the Nebraska Farm Bureau Federation and the Nebraska Independent Bankers Association.

    Barrett, a conservative, told state reporters, "I'm not opposed to tax relief and cutting spending," but "it appears to me Measure 413 is going to end property tax relief" and thereby hurt farmers.

    Whatever it does to schools or taxes, Measure 413 has been a huge headache to Mike Johanns, mayor of Lincoln and Republican nominee for governor. During a tough primary last spring, Johanns joined the two other GOP candidates in endorsing the spending-and-tax-cap measure, then still in the signature-gathering stage. With the nomination in hand, he wavered, but signed the petition on the final day it was on the streets. Less than a week later, he reversed positions and announced he would vote against it.

    His opponent, Democrat Bill Hoppner, had condemned the measure for months, and was quick to accuse Johanns of an opportunistic switch to secure the support of farmers. Johanns replied that it was only after the primary he had time to study the measure and concluded it would jeopardize his pledge to push for property tax relief. Besides, he said, "it has the potential of tearing this state apart."

    Johanns's conversion has not stopped Hoppner from using the issue in his ads, but the most recent Omaha World-Herald poll showed him trailing Johanns by 15 points in the race to succeed retiring Gov. Ben Nelson (D).

    But Measure 413 itself may be in trouble. Last week's World-Herald poll showed 34 percent supporting it and 41 percent opposed, with the rest undecided. Compared with a month-earlier poll, when the measure had the lead, support had dropped most sharply in Barrett's largely rural 3rd District.

    The backers of Measure 413 got on TV first, in August, but now opponents have mounted their media campaign. Both sides have resorted to dramatic images to simplify the complex fiscal policy debate. The yes ads show a giant red balloon expanding on the steps of the state Capitol, representing the growth in Nebraska budgets, as a narrator says: "For the last 20 years, lobbyists and politicians have been on a spending spree. And you're paying for it." In the final frames, the balloon explodes, sending shards across the landscape.

    The opposition response ad shows a bottle of poison, marked with the skull and bones, reflecting the danger it says Measure 413 poses to schools and family farms. "It's not a tax lid. It's poison for Nebraska," the narrator intones.

    Johanns said in an interview, "I've promised to reduce government and lower taxes and I believe I can do that better without the constraints 413 puts on fiscal policy."

    But Jaksha said, "I've been at this a lot longer than he has, and he's going to wish he had 413 when he gets into that job."

    © Copyright 1998 The Washington Post Company

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