LINCOLN, Neb. (AP) — Nebraska Gov. Dave Heineman urged lawmakers Thursday to pass nearly $326 million in tax cuts aimed heavily at middle-class families and businesses, saying the state must ease their financial burden now to attract newcomers.
The Republican governor said he wants to reduce corporate and individual income tax rates over a three-year period, starting in January 2013, and eliminate an inheritance tax collected by Nebraska counties. The plan also would widen tax brackets, so families have more income taxed but at lower rates.
"The opportunity to provide tax relief for our taxpayer is now," Heineman said in his State of the State address to the Legislature. "Our hard-working, middle class taxpayers need more discretionary income to take care of their families and to provide their kids with a good education."
The proposed cuts would take effect in January 2013, with nearly $275 million in relief for individuals and nearly $53 million for businesses.
"Special interest groups will argue we can't afford tax relief because they want to take that money from our hard-working taxpayers and spend it on their favorite projects," Heineman said. "The question is tax relief for hard-working middle-class Nebraska taxpayers, or more spending for special interest groups? The choice is clear."
Heineman said earlier tax cuts have helped Nebraska grow, with 270 businesses that have committed to invest $5.9 million in Nebraska and created more than 19,500 jobs. He praised the state's "business-like approach" to agency budgets, and moves to build the state's cash reserve. He also highlighted the state's Tax Foundation ranking, which has risen to 29th nationally compared to 45th in 2006.
Heineman signed a similar tax relief bill in 2007 that provided $425 million in income, sales and property tax cuts over a two-year period.
"That's good news, but we can do better than 29th," he said. "Even with our healthy economy, many Nebraska middle class families still struggle from paycheck to paycheck. We can help those families by changing Nebraska's income tax structure and allowing them to keep more of the money they make."
Speaker of the Legislature Mike Flood said he was pleased the governor promised to include input from many groups in solving the problems. He said no one bill would be able to handle the issue.
"The governor left the door wide open for conversation," he said. "No line was drawn in the sand today."
Flood called the governor's tax cut plan refreshing. He said he would have to more carefully examine the numbers the governor is proposing.
"It's going to get a good discussion," Flood said. "I like the idea of middle class tax relief."
Heineman also acknowledged during his speech problems with the state's effort to privatize child welfare services, but repeated his opposition to "the failed practices of the past."
"We're all in this together," Heineman said. "All of us have a responsibility to improve the system. The accountability starts with you and me. Together, we need to bring stability to Nebraska's child welfare system. The focus should be on the future and on measurable results."
Omaha Sen. Jeremy Nordquist, a Democrat in the officially nonpartisan Legislature, said he would like to have seen the governor focus more on the troubled system.
"I found it unfortunate that the governor chose to offer tax cuts to higher income Nebraskan and failed to put forward any proposals addressing our child welfare system," Nordquist said.
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