Hughes: Target stimulus funds to infrastructure

McCOOK, Neb. – Cities, counties, and schools will receive a “considerable amount” of money through the State as a result of the latest COVID stimulus package, according to State Sen. Dan Hughes, and cities and counties should target using those funds for infrastructure projects like paving, bridge, and sanitary projects. Sen. Hughes spoke to constituents at Thursday’s Legislative Update.

Sen. Hughes said the state has a lot of money that it’s trying to find a home for, but he doesn’t want to see the creation of new programs that would be an ongoing expense for the state. The stimulus funds cannot be used to create income tax breaks for the citizens.

He said there is approximately $150-$200 million “on the floor” meaning the dollars are not earmarked. “Senators could draft amendments to spend that money on the floor when we get into the budget debate, and that’s a scary number,” Hughes said, adding that the highest amount available in his history at the legislature was $40 million.

He said he is in favor of Gov. Ricketts’ desire to put a big chunk of those discretionary funds into the first phase of the property tax relief fund. He said the Appropriations Committee has allocated $115 million for a new prison, which is about half of the amount needed.

Nebraska’s economy has been resilient through COVID and commodity prices are up, so the one and two-year economic outlook is favorable according to Sen. Hughes. “That’s a good thing and we’ll certainly enjoy it while it lasts. But we need to be very cautious not to implement programs that are going to be more than a one-time expense.”

McCook City Councilman Gene Weedin questioned Sen. Hughes about LB26, introduced by Sen. Justin Wayne (Omaha). The bill would provide a sales tax exemption for residential water service and Weedin estimated that passage of the bill would cost the City of McCook $134,000 annually. He said if the bill passes, cities would be forced to increase water fees to make up the revenue lost from the sales tax exemption. Sen. Hughes said he would keep Weedin’s concern in mind, but he has not yet decided how he will vote on the issue.

City Manager Nate Schneider told Sen. Hughes about several city infrastructure expenditures that will be needed in the upcoming years, including new radios at the police department, fire trucks for the fire department, and needed road repairs within the city. He expressed his concern about LB408, introduced by Sen. Tom Briese (Albion), which would limit the annual increase in property taxes, excluding approved bonds, for all political subdivisions to three percent.

Schneider voiced concern about unexpected expenditures, inflation, and mandates that drive up costs for the city. “I worry a little bit that if we start putting limitations on top of the lids that we already have, that’s going to end up strangling the cities and other political subdivisions in the State of Nebraska.” Schneider further explained that residents expect a certain level of amenities from their cities, and all of those amenities cost money.

Sen. Hughes said he has been getting the same comments from other municipalities. “That’s something that we’ve got to balance out – the high property tax that we pay. Nebraska has become way too reliant on property taxes for our local government.” He went on to say that state government was partially to blame because funding gets cut to cities, counties, and schools whenever the state budget gets tight. He said LB408 is endorsed by Gov. Ricketts, but he is concerned whether or not the legislation will achieve its intent of keeping property taxes from escalating over the long term.

Another bill discussed was LB474 introduced by Sen. Anna Wishart (Lincoln), which adopts the Medicinal Cannabis Act. The bill is still in the Judiciary Committee, but Sen. Hughes predicts that it will make it to the floor, where he doesn’t think it will pass. “It will be filibustered, there’s no question about that,” Hughes said, although he did caution that the legislature could be unpredictable. He also stated that his position has not changed; he is still opposed to the legalization of medicinal marijuana.