Lawmakers could cut off aid to cities


February 8th, 2011

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Lincoln, NE – Nebraska lawmakers opened their first big debate of the year on spending cuts or tax increases Tuesday, but they didn’t even agree on which side was which.

As part of his plan to balance the budget, Gov. Dave Heineman wants to eliminate $44 million the state would otherwise send cities, counties, and natural resources districts over the next two years. Legislative Speaker Mike Flood called on senators to fulfill their promises about how to close a projected $1 billion gap.

“We all reassured – maybe not all of us, but most of us reassured – our constituents,” he said, “at county fairs and parades, in downtown Omaha and downtown Scottsbluff, that we would do everything we could not to raise state taxes. Today, we walk the walk.”

Local governments oppose the plan, saying it could force them to raise taxes or cut services. Omaha Senator Gwen Howard cited one example.

“We’re going to … still have folks that are in jail, and those bills will have to be paid,” she said. “And when we look at that and say, ‘Well, where will the money come from? What happens when you shift the bill?’ Somebody else has got to cough up those dollars. My concern is it’s going to be the usual funding source, which will be property taxes.”

Supporters say local governments should have to make that decision. And Sen. Galen Hadley of Kearney wondered about critics’ alternatives.

“If we don’t do this, what would you suggest we cut at the state level? Do we cut school aid? Do we cut health and human services? Where do we find the $44 million? Or do you want us to increase taxes?”
In fact, cuts are also proposed for schools and HHS. But Omaha Sen. Heath Mello argued local aid need not be cut.

“Anyone who says we have to do this, either, one: has not read the rules and understand the budget process, or two: wants to take this bill because it’s the Governor’s bill, and because it’s easy to push tax shift down to the local government.”

Several senators suggested the cuts could be avoided, in part, by not giving the University of Nebraska Lincoln the $25 million for its Innovation Campus that the Governor proposed. Lawmakers adjourned for the day without reaching a vote.

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