Governor proposes tax relief, prison system reform

With an eye toward improving the future for the state’s middle class, Gov. Dave Heineman proposed providing tax relief, reforming the state’s “good time” law and rejecting the expansion of Medicaid during his State of the State address to lawmakers Jan. 15.

Heineman cited the state’s growing economy and high income and property taxes as his motivation to reform the current tax code. He acknowledged the interim work of the Tax Modernization Committee but said that now was the time for action.

“We don’t need more time to study this issue,” he said. “We already know taxes are too high and high taxes are detrimental to economic growth. It’s time for a straightforward conversation about property and income tax relief.”

Heineman proposed a 10 percent decrease in agricultural land valuations, from 75 to 65 percent. He said the state’s strong agricultural economy cannot continue to exist with unreasonably high property taxes.

“When agriculture fares poorly, so does rural Nebraska,” Heineman said. “However, when agriculture succeeds, rural Nebraska and main street Nebraska flourish.”

The governor also proposed providing up to $500 million in tax relief over the next three years, citing the $1.2 billion currently in the state’s cash reserve. He proposed lowering the top state tax income rate from its current level of 6.84 percent, saying that most middle class citizens would benefit from the decrease.

The governor also cited Nebraska’s “good time” law as an issue requiring immediate attention. The current practice of allowing violent criminals to automatically receive good time when they enter prison is flawed and dangerous, he said.

“Allowing the most violent criminals to enter into our state’s prison system and have their judge-imposed sentences automatically reduced …is not sound public policy,” he said. “The public safety of our citizens should be priority number one and that should start with violent criminals being required to earn good time.”

Heineman urged lawmakers to reject the proposed expansion of Medicaid, saying the costs to the state are too high and would disproportionately hurt Nebraskans.

“The required parts of the new federal health care law will cost the [state] more than $200 million in state general funds over the next six years,” he said. “That is $200 million in funding that could be used for education.”

This marks the nine-year governor’s final State of the State speech to the Legislature.