Dear Friend,
When I was hired last fall, I was contacted by many people who expressed how much respect and admiration they have for OpenSky. In my first few months on the job, it’s been very easy for me to see that OpenSky is indeed the incredible organization people see it as. This is true because of support and interest from Nebraskans like you who understand the importance of Nebraska’s fiscal debate to “The Good Life.” I wanted to take a minute to provide an update about some of the key fiscal policy developments from the recently completed legislative session.
Protecting vital investments in education
OpenSky helped stop a measure to cap property tax revenues for schools by showing how the bill would cause significant revenue losses for school districts with the highest needs. We also showed how the measure would punish other districts that had worked to keep their property taxes down. Additionally, our work helped stop multiple pushes to create a new tax credit for donations to private school scholarship programs. Our analysis showed these credits would give those donations preferable tax treatment while doing little to improve the quality of education for low-income students, despite claims to the contrary from proponents.
Consumption tax proposal halted
OpenSky’s work helped stop a measure aimed at replacing most state and local taxes with a consumption tax. Our research showed the proposed consumption tax would increase the tax load for middle-income residents and that the rate would have to be much higher than proponents claimed in order to offset the massive revenue loss it would cause for state and local governments. The measure also would have forced localities to get their budgets from the state, which would have undermined local control, a principle many Nebraskans hold dear.
Massive tax cuts will create major future problems
In line with national trends, Nebraska lawmakers came into the 2022 legislative session with a revenue surplus due largely to the massive influx of federal relief dollars. Because of the surplus, Nebraska lawmakers were confronted with a deluge of tax cut proposals – most of which set the state up to experience major revenue losses in the future while predominantly benefiting the wealthy and out-of-state corporations. OpenSky worked closely with lawmakers, journalists and others to raise awareness about the impact of the measures on everyday Nebraskans as well as on our state’s ability to fund schools, health care and other pillars of a strong economy. Despite this, we faced a push for tax cuts stronger than we’ve seen in OpenSky’s 10 years and the Legislature ultimately passed the largest tax cut package in our state’s history. Once fully implemented, the package will cost the state about $950 million a year. Some of the most expensive parts of the package will phase in over the next several years, which means the full fiscal impact of the measure likely won’t be felt immediately. Further, many policymakers who helped pass the measure will be term-limited when these cuts fully take hold, leaving any tough decisions regarding cuts to the services we rely on or increasing other taxes and fees to balance the state’s books to future lawmakers.
Tax cuts and pandemic relief discussions highlight troubling trend
Another major focal point of the past session was the distribution of $1.04 billion in American Recovery Plan Act dollars throughout the state. Ultimately, policymakers passed a bill that did make some important investments in public health infrastructure and premium pay for essential workers. The measure, however, was light on support for individual Nebraskans recovering from the pandemic. This reflects an emerging trend from the session that the needs of everyday Nebraskans regularly took a backseat to other interests. We saw this during the debate around the tax package as efforts to provide direct relief to all Nebraskans and tax cuts for middle-income residents were rejected in favor of tax cuts for the wealthy and out-of-state corporations.
OpenSky’s mission is to improve opportunities for all Nebraskans – not just those in certain income or demographic ranges. A major emphasis of our work is and increasingly will be to reverse this type of trend and instead ensure the voices of all Nebraskans and particularly those of low- and middle-income residents – a high-percentage of whom identify as Black, Indigenous and People of Color – are actually factored into state fiscal policy.
That is it for our legislative update but we will be in touch in the coming months to discuss our interim work and Nebraska fiscal matters. Until then, please know I am grateful for your continued interest in our work and our state’s fiscal debate.
Sincerely,
Dr. Rebecca Firestone
Executive Director
P.S. Please mark your calendars for our 2022 Fall Policy Symposium, which will be held on Thursday, Sept. 22 at Innovation Campus in Lincoln. We will be in touch in the coming months with more information and details about the event but we’d ask that you save the date now. We look forward to seeing you in September!