Sustained vetoes will cut provider rate funding for key services; Tax credits for private school scholarship donations raise concerns
Provider rate funding for services for the developmentally disabled and other populations will be reduced following the Legislature’s rejection of $32.7 million in gubernatorial veto overrides on Wednesday.
Biennial cuts that will result from lawmakers sustaining the governor’s vetoes include:
· $32.5 million in provider rate funding for developmental disability services, behavioral health services, child welfare and other health and human services; and
· $300,000 in funding for probation services.
The sustained vetoes were part of a budget veto package that reduced general fund appropriations by $56.5 million. The vetoes — which add to budget cuts already made by the Legislature — also reduced funding for higher education and the replacement of the State Capitol’s heating and air conditioning system. The vetoes called for adjustments to some funds within the Department of Roads budget, as well.
In another state fiscal development, the Omaha World-Herald reported that Legislature’s Revenue Committee on Thursday advanced LB 295 to be debated by the full Unicameral next year. The bill would allow taxpayers to claim income tax credits for the full amount of donations to private K-12 school scholarship programs. The proposed committee amendment to the bill (AM1418) would limit the credit to:
· $10,000 for a married couple filing jointly and $5,000 for all other taxpayers;
· $50,000 for S Corporations, LLCs, partnerships, estates and trusts; and
· $150,000 for corporations.
Under AM1418, the total value of credits provided by the state would be limited to $2 million in the first year and could increase gradually each year, capping out at $10 million annually.
Furthermore, the amendment stipulates that corporations could claim up to 70 percent of those credits. Two other amendments are pending:
AM 1420, which would change the corporate limit from $150,000 to $100,000; and
AM 1421, which would allow corporations to claim up to 75 percent of the total amounts of the credits.
LB 295 enhances the tax benefits of donating to scholarship-granting organizations, as opposed to other types of charitable donations because providing a 100 percent credit for such a donation results in a dollar-for-dollar reduction in the amount of taxes owed. All other charitable donations reduce taxable income, which means the tax benefit is worth the amount of deduction multiplied by the tax rate in the tax bracket in which one’s income would have fallen prior to the deduction.
OpenSky has several concerns about the measure, Executive Director Renee Fry said, including the fact that some wealthy donors may actually be able to profit from their donations to scholarship-granting organizations.
“In fact, in other states that have similar programs, such as South Carolina and Georgia, some scholarship organizations advertise these credits as money-making opportunities,” Fry said. “At a time when a major budget shortfall is causing cuts to key services like higher education and programs for the developmentally disabled, we have serious concerns about creating a new tax credit that would further reduce revenue and allow wealthy Nebraskans to turn a profit by way of the tax code.”