Paul Hammel: Simple ways to close the state budget gap dismissed
Way back in the day, when I was in high school, I had a summer job of mopping floors at a local hospital.
Being a janitor was a really satisfying job because when you were done, you could easily see what you had accomplished, unlike a lot of other occupations.
Paul Hammel
Anyway, one of my compatriots on the broom was a guy named Howard Johnson. Howard was as big as an actual Howard Johnson’s and he had an axiom for work: “the simplest way is the best way.”
As I recently watched the Nebraska Legislature struggle with closing a multi-million dollar hole in the state budget, I kept thinking of Howard’s advice and wondering “why don’t they do some simple things” to solve their problem.
Like raising taxes on cigarettes, which would not only encourage more people to quit a bad habit but raise a badly needed $50 million to close the budget deficit.
Cigarette taxes in Nebraska haven’t been raised since 2002 and at 64 cents a pack, our tax ranks as the ninth lowest in the country. But a proposal to raise that tax by $1 a pack got shot down. We can't raise taxes, it seems, even on cigarettes.
A similarly “simple” way to solve the budget crisis (a deficit which has grown to nearly $650 million) would be to pause, or at least slow down, the deep state income tax cuts passed in 2023.
Back then, the state was flush with COVID-era funds and legislators figured the state could financially handle, if done incrementally, cutting individual and corporate taxes down to 3.99%. The top rate had been 6.84%, but is scheduled to fall to 4.55% this year and then to 3.99% in 2027.
Well, now the state is short of money, in large part because cutting taxes means millions of dollars less to provide government services. It doesn’t make sense to give away state tax revenue when you don’t have the money to give away.
The simple solution would be to stretch out the gradual decrease to 3.99% by a couple of years, hitting that mark in say, 2029 instead of 2027. That would provide millions to close the budget hole. That would still be a “tax cut,” thus allowing senators and the governor facing re-election this year to say that they still delivered a tax reduction, albeit a smaller one.
Howard, if he was still with us, would, I’m sure, question why we’re parking nearly $79 million in the bank on the long-shot idea of building the Perkins County Canal out on the Colorado border.
The governor has tapped all kinds of idle funds in state agencies to help close the budget gap with the idea that “if they’re not using it, we will use it.”
But somehow, we can't tap the canal funds, because, it was said, we need to convince Colorado that we’re really serious about building an expensive irrigation canal that was ditched (pardon the pun) decades ago.
If the Perkins County Canal is so important, I’m sure we can find the money down the road, hopefully when the state isn’t short on cash. But right now, the state budget needs some love.
Seems pretty simple to me.
Paul Hammel has covered the Nebraska state government and the state for decades. Prior to his retirement, he was senior contributor with the Nebraska Examiner. He was previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun. A native of Ralston, Nebraska, he loves traveling and writing about the state.
