In a rare evening news conference, Gov. Dave Heineman said Tuesday night that a state surplus as high as $500 million should be used for meaningful tax relief. Heineman called on legislators to provide both property tax and income tax relief.
His announcement came before his annual State of the State address Wednesday morning to the Legislature, when he typically sets out preferred programs.
Heineman said taxes in Nebraska are detrimental to economic growth and prosperity.
He said property taxes are soaring, thanks to a three-year boom in crop prices, but added that the "strong agriculture economy won’t continue to exist with unreasonably high property taxes."
Heineman said a tax relief package of $370-$500 million is possible "by continuing to hold the line on state spending, by utilizing a portion of the record high state cash reserve fund during the next three years, and because of Nebraska’s growing economy."
Now is the time, he said.
“In rural Nebraska, record high property taxes are hurting our farmers and ranchers," he said. "That’s why I support the Nebraska Farm Bureau proposal to lower ag land tax valuations down from 75 percent to 65 percent of the actual value."
He said he also supports efforts to reduce state income taxes.
Also, Heineman said:
• The state’s cash reserve is now at a record high $722 million.
• Transferring $220 million for tax relief over the next three fiscal years still leaves $500 million in the cash reserve fund.
• A $500 million cash reserve fund is more than sufficient for an annual budget of approximately $4 billion, such as Nebraska's.
The governor called for holding the line on state spending.
He said the Legislature’s current spending estimate is a 4.7 percent increase for the next biennium budget, a increase that results in $370 million being available for tax relief over the next three years.
He said spending growth of 4-percent in 2016-17 ups the amount available for tax relief to nearly $500 million.
Heineman said an annual state spending increase of 4 percent is realistic and reasonable.
He said during the last 14 years, the average annual spending increase in state general funds is 3.55 percent.
Heineman is expected to discuss more details of the plan in his State of the State address at 10 a.m. He will immediately fly around the state to discuss the situation with the public and will be at the North Platte Regional Airport at 4:30 p.m.