OpenSky looks back on a productive legislative session

(EDITOR’S NOTE: A message from OpenSky’s executive director Renee Fry about the 2013 session of the Nebraska Legislature.)

Nebraskans have a lot to be optimistic about on the fiscal policy front as the Legislature wrapped up its session Wednesday.

A variety of measures were passed in the unicameral this session that mark progress toward stronger and more transparent state fiscal policy.

Tax study a landmark development

Perhaps the biggest fiscal policy development was the formation of the Tax Modernization Committee, which will conduct a comprehensive study of the state’s tax code in the interim and then report back to the unicameral in December with suggestions for tax reform.

OpenSky was a strong proponent of the study as we have called for a comprehensive review of the state’s tax code since we completed “Looking for Clarity,” our budget and tax primer, in July of 2012.

The study presents an exciting opportunity for the state to make well thought-out changes to its tax code that could benefit all Nebraskans. Momentum for the study built in the Unicameral after two bills – LB 405 and LB 406 – that would have eliminated or cut the state’s corporate or individual income taxes were rejected.

OpenSky was a leading voice of opposition on the two bills as research indicated that the proposals would have been bad for Nebraska and its economy.

Laws increase subsidy transparency

The Legislature also passed two bills – LB 612 and LB 629 – that will increase the level of scrutiny of the state’s tax subsidy programs. This is good news as earlier this year, a report by the Legislature’s Performance Audit Committee found Nebraska has no good way to know if the millions it spends on subsidy programs actually work.

LB 612 – a bill by Sen. Paul Schumacher of Columbus — calls for the Department of Revenue to appear at a joint public hearing before the Revenue and Appropriations Committees and present on various tax expenditure and subsidy reports.

LB 629 by Sen. Danielle Conrad of Lincoln requires Nebraska governors to include with their budget proposals, Department of Revenue reports on the state’s subsidy programs and other tax expenditures.

OpenSky testified in support of both bills.

Cash reserve bolstered

OpenSky also supported the Legislature’s decision to build up the state’s “Rainy-Day Fund” to $625 million by putting $53 million in projected revenue for the 2013-15 biennium as well as a $125 million one-time windfall into the fund. This move helps bring the fund closer to the recommended level of 16.7 percent of the state budget.

Our state’s recent history shows that a healthy cash reserve is very useful. As the economy slid into a recession in 2007, Nebraska was able to draw on its relatively-strong cash reserve to keep program and service cuts to a minimum.

Budget stems cuts to important services

We also supported the Legislature’s budget proposal to increase appropriations by 5.2 percent.
While this does little to restore cuts to education and other services that occurred in recent years, it does end a decade-long trend of spending declines that led to the cuts in important services.

Looking ahead

As we move into the interim, our focus turns largely to the tax study but we also will venture deeper into the area of education finance policy as we have just hired a new education policy analyst – Kay Stilwell Bergquist. We look forward to working closely with lawmakers and participants in the tax study and we are excited to begin deeper research into education finance.
Tax study resources

As a reminder for those interested in the study, we have audio transcripts of the 2007 Burling Commission Report and the first several chapters of the 1987 Syracuse Study available on our website. Both studies will be referenced by the Tax Modernization Committee.

We also have on our website videos from our January tax symposium that feature comments tax expert Dr. Richard Pomp and participants in the Burling and Syracuse studies. The videos also include testimony from a former legislative staff member who helped with the 1967 implementation of the state income and sales taxes.

We’ll continue to provide more resources for those involved in the tax study throughout the interim.

Tax panel discussion

Our interim activity kicks off next week as we will be part of an NET Radio and Television panel discussion on tax policy. The program will air initially next Friday, June 14 at 6:30 p.m. CDT on NET Radio and then at 8:30 p.m. CDT on NET 1 or NET HD. It will re-air at various times throughout the month of June.

So as we conclude a very productive Legislative session, we thank you for your interest in OpenSky and these important issues.