Legislature Begins 2022 Session with Big Issues, Lots of Money

When the Nebraska Legislature begins this year’s session Wednesday, lawmakers will face major issues like taxes, school funding and prisons, along with deciding what to do with lots of federal money.

Sometimes, when the Legislature begins its session, there’s a fairly close match between the money that’s expected to be available, and realistic ideas about how it’ll be spent in the state budget.

The state spends about $5 billion a year on everything from schools to health care and prisons.

This year, the state’s expecting to have an extra billion dollars from the federal American Rescue Plan Act, or ARPA. That’s about 20 percent on top of the state’s annual budget.

Still, Sen. John Stinner, chair of the Legislature’s Appropriations Committee, which shapes that budget, said the demand for those extra dollars exceeds the supply.

“I do have about $4 billion of requests, as opposed to having $1,040,000,000 to allocate,” Stinner said.

Those requests range from $1,000 bonuses for school personnel to a new rural health center in Kearney, eliminating a waiting list for developmental disability services, and vastly expanding internships. In addition to the federal money, state revenues are coming in higher than expected, leading to a nearly $1.5 billion cash reserve by the end of the session. Sen. Mike Hilgers, speaker of the Legislature, said senators have to be careful in their spending decisions.

“We know we're gonna have more potential projects than we will have dollars to spend. And we have to do it wisely. And so the my approach is to look first at things that are one off, that can be transformative. In other words, creating programs that create additional ongoing recurring obligations on behalf of the state or taxpayer dollars are not projects that I would look to support,” Hilgers said.

Hilgers chairs a special committee to address tourism and economic development issues around Lewis and Clark Lake along the Missouri River in northeast Nebraska, and Lake McConaughy near Ogallala. The committee held hearings in the affected areas.

“For Lewis and Clark and Lake, what we heard was very similar which is ‘We have these tremendous lake opportunities – lakes that exist – and what we want is more access to the water – whether it’s a marina or better roads or more amenities on the water,’” he said.

The committee has also been considering proposals for flood control on the lower Platte River, involving building a big lake between Lincoln and Omaha. But Hilgers hastens to add that, unlike previous proposals that have been shot down, this one would not involve flooding the town of Ashland.

Another big infrastructure decision lawmakers will face involves a proposal to build a new, 1,500-bed prison. The Legislature considered the proposal last year and set aside $100 million for it, but didn’t make a final decision. Senators did give the Department of Correctional Services $15 million for design work and to purchase options on potential sites. Corrections Director Scott Frakes said that work is underway.

“We have consultants are out looking for potential sites and identifying areas that check all the different criteria that we’re looking for. (The) top criterion is a viable workforce,” Frakes said.

The prison system has been plagued by high staff vacancies and turnover, but officials say revised contracts providing pay raises of up to 40 percent have spurred lots of new applicants. At the same time, officials from all three branches of government have been meeting to discuss reforms to the criminal justice system, including measures designed to hold down the prison population by reducing recidivism.

Sen. Steve Lathrop, chair of the Judiciary Committee, says that work should help determine construction plans.

“I think the criminal justice work that we've done this summer and fall should inform what we build if we build it,” Lathrop said.

Another issue confronting lawmakers is taxes. There’s the so-called EPIC proposal, to Eliminate Property, Income and Corporate taxes, and replace them with a consumption tax on purchases of new goods and services. There’s a proposal from the business-oriented BluePrint Nebraska group to lower income taxes and tax more services. And Gov. Pete Ricketts is expected to unveil his own tax proposals in the coming days.

Sen. Lou Ann Linehan, chair of the Revenue Committee, which handles tax legislation, wants to lower income taxes, and says the state’s higher-than-expected tax collections make any proposals for new taxes unlikely to pass.

“I think any expansion of taxes when you have that kind of revenue in hand is probably not politically doable in an election year,” Linehan said.

Another issue intimately linked to taxes is school aid. Sen. Lynne Walz, chair of the Education Committee, has a proposal to set aside a half cent of the existing state sales tax, and twenty percent of the income tax, for Nebraska’s public schools. Walz said her proposal would provide property tax relief.

“It does provide a significant amount. Last year, if this would have been implemented, it would have provided us with $715 million worth of relief to people,” Walz said.

That would be about a 15 percent reduction in the $4.5 billion property taxes paid by Nebraskans. In Walz’ original draft, there were no restrictions on school spending increases, something both Linehan and Ricketts have supported.

And there will be some hot-button social issues to confront, for example, abortion, as the U.S. Supreme Court considers a case that could return fundamental decisions on abortion law back to state legislatures.

All in all, it promises to be a busy session, packed into 60 working days between now and the scheduled adjournment in mid-April.

Editor’s note: You can watch gavel-to-gavel coverage of the session each day the Legislature meets on Nebraska Public Media World, or streaming at nebraskapublicmedia.org. And we’ll have legislative updates daily at 5:45 and 7:45 Central during Morning Edition, and 5:45 Central during All Things Considered.