Governor proposes increases to education, elimination of income tax

A state economy that makes higher education more accessible, encourages job creation and eases the tax burden on citizens was the focus of Gov. Dave Heineman’s State of the State address to lawmakers Jan. 15.

Heineman proposed a 5 percent increase in state aid to public schools for both fiscal year 2013-2014 and FY2014-15 — an increase of $125 million. Special education aid also would see a 5 percent annual funding increase under the governor’s budget proposal.

“This is a great state and it starts with our citizens,” Heineman said. “Our students of today are the leaders of tomorrow, and it is critical to our future that they have affordable access to a quality higher education.”

Heineman acknowledged the struggle of working-class families to afford higher education for their children. He proposed an increase in state aid that would provide $68.3 million to fund a two-year tuition freeze for students enrolled in the state college system. Community colleges would receive $10.7 million to offset similar tuition freezes.

Under his two-part budget proposal, the governor called for a modernized tax code that would eliminate either the individual and corporate income taxes or lower rates dramatically by removing business tax deductions.

“We’re operating in a technology-driven, global economy and we need a new tax system,” which he said had not been seriously considered for more than 50 years. “Our goal is a better business tax climate that will create more high-paying jobs and more rewarding careers for our sons and daughters. We need a tax climate that rewards working families.”

The second part of the budget proposal addressed the implementation of the federal health care mandate, which he said would have a significant financial impact on the state. Heineman said enacting the federal Medicaid program alone would require an estimated $72.3 million in general funds.

“That’s $72 million in new general fund spending for President Obama’s new federal health care law that should be going to state aid to education or higher education,” he said.

The budget proposal also includes $176 million in general funds for Medicaid and other medical providers to address increases in provider rates, service utilization and federal requirements for increased state funds to finance services.

Additional general projects outlined in the governor’s budget proposal include $47 million in funding for a new Central Nebraska Veterans Home and an increase of $29.6 million in developmental disabilities aid.