NEBRASKA CITY – Gov. Pete Ricketts said budget cuts and a new system for assessing taxes on ag land are part of his overall tax reform package.
Last November, the governor responded to forecaster’s reports that the state will collect about $200 million less than expected by renewing a hiring freeze for most state agencies and telling department heads to expect more cuts this legislative session.
Ricketts said Nebraska has already made progress in controlling state spending.
Ricketts: “Just to put this in perspective, we have reduced the growth of government by about 90 percent. Before I took over as governor the budget was growing at 6.5 percent and this budget right now is slated to go up .6 percent. But, obviously we have to live within our means just like all Nebraska families do.”
He said forecasters expect less state revenue as the state’s number one industry, agriculture, continues to see declines.
He said farm and ranch income has been cut about in half since 2013.
Ricketts: “When farmers and ranchers see their income go down they stop spending money and that ripples through our entire economy. That’s really what we are seeing going on here in large part.
He said controlling spending and tax relief are two sides of the same coin.
Ricketts: “The only way you can have sustainable tax relief is by controlling spending. You control your spending and let your revenues grow faster. Then you can afford to take your rates down.”
Ricketts said he has been working with legislative and farm leaders to build a coalition in support of tax relief. He said a property tax system based on potential income for ag land rather than market sales should be part of the picture.
Ricketts: “It ties the ag land valuation more closely to what they can actually earn off the land, so it is more fair to our farmers and ranchers and it is one of the things that has helped those other states control their property tax valuations, so we want to go to that same sort of system. In fact, if it had been in place this year, we would have reduced average ag land valuations by about 10 percent.”
He said had income potential assessment in place, ag land valuations would not have gone up 252 percent over the last 10 years.
He said local spending control will still be needed.
Ricketts: “What we saw over the past decade, as those valuations went up 252 percent, and, if a local taxing entity, like say your school district, didn’t take their levy down they just collected a lot more money. They just go a windfall out of it. If we would have had an income potential assessment, we would have avoided that situation in the first place.”
The Republican governor who is up for re-election in November said the state budget and taxes are his two top priorities for the session that begins Wednesday.