What to look for from the Legislature

Due to a dramatic turnaround in the state's economy, Nebraska rebounded from the post 9-11 slowdown to come in nearly $200 million above projected tax receipts in 2004.

That should mean that the state will cut back on taxes in 2005, right? You might expect that, but it's not going to happen, according to state senators surveyed by the Associated Press and the Omaha World-Herald.

The senators say Nebraska still faces a tax pinch because of new state spending obligations which will come into play in 2005. Even with the sharp upturn in tax collections, the state still faces a $233 million shortfall as of June 30, 2007.

The spending pressure is the result of what are called "entitlement" programs. Those are the programs which are beyond the control of the current legislature. According to State Sen. Tom Baker of Trenton, the obligations include additional spending for the state's Medicaid-Medicare share, as well as state aid to education and the state's share of special education funding.

"We've had a number of meetings and hearings since the legislature adjourned," Sen. Baker said, "and I've heard little talk of tax changes. One of the few things that may come up is an adjustment of the fuel tax, which has been unchanged since 1986."

Also in the talking stage are business tax incentives. In an article in this morning's Omaha World-Herald, State Sen. Pat Bourne of Omaha is quoted as saying, "We are at a point where Nebraska is no longer competitive with other states as it relates to business incentives. If we want to grow the state, we must enact an incentive program that truly provides incentive." However, few legislative observers expect that to happen quickly. Among them is Barry Kennedy, president of the Nebraska Chamber of Commerce and Industry, who says the state needs to move in the direction of additional business tax incentives, but must realize it will take time to accomplish.

As far as other issues are concerned, Sen. Baker expects an effort to expand wireless regulations. As chairman of the Transportation and Telecommunications Committee, Baker will be working with Jerry Vap of McCook, chairman of the Public Service Commission, on this legislation.

One thing not to look for in the 2005 legislative session are casino gambling proposals. After casino plans fell to defeat in the 2004 general election, senators are expected to bypass the issue at this year's session.