Spending Lid Too Flawed For Constitution
Lincoln Journal Star
Wednesday, October 23, 2006

The Journal Star took its stand against Initiative 423 early, urging people in June not to sign the petition to put the spending lid on the ballot.

Since then, opposition has expanded. Currently there are about 75 groups that have taken positions against the proposal. They range from the Lincoln Chamber of Commerce to the Farm Bureau to Catholic Charities to the Omaha Police Union to the Municipal Fire Chiefs Association.

Although opponents to the proposal often come up with long lists of reasons to oppose the initiative, one reason overshadows the rest.

If the lid passes, there would be more pressure to raise property taxes. That’s the last thing the state needs. Property taxes already are the most hated tax in the state. In some counties, they are among the highest in the country.

Initiative 423 does nothing to limit property taxes. The lid would affect only sales and income taxes.

The proposal does nothing to control spending at the local level. It would affect only spending at the state level.

The net effect of the proposal would be to shift responsibility and the tax burden to local government, where property taxes are set.

Currently, about a third of state income and sales tax revenue is returned to local government. If the lid passes, state government’s ability to return this money would be curtailed.

Gov. Dave Heineman pointed out another flaw in the proposal. The lid would hamper the state’s ability to make one-time investments that have the effect of saving money in the long term. The state can’t just borrow money like the federal government.

For example, state senators this year approved $10 million for community corrections programs that are an effective and cheaper alternative to building more prisons. That flexibility would be restricted under the lid.

Evidence of the sort of problems that can be caused by the lid can easily be found in Colorado, where voters recently suspended a similar lid for five years.

More problems created by the Colorado law are just coming to light. The state, for example, said this summer that it will have to ship about a thousand prisoners out of state because the state couldn’t afford to build it’s own prisons. The cost of the arrangement is going to be huge. Colorado basically will have to pay whatever it takes. But it’s either that or let the prisoners go.

Nebraska might benefit from fundamental tax reform, but the flawed plan on the ballot is the wrong way to go about it.

Passage of the proposal would create more problems than it would solve. Voters should mark their ballots against Initiative 423.