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LINCOLN – It’s daylight savings time, so let’s turn back the clock … to four years ago when the state was still contending with the COVID-19 pandemic.
There was a silver lining of sorts to those awful days – a huge influx of federal funds to keep the economy going.
And state senators met on how to spend that glut of money with plans to finally make Nebraska a more attractive destination for new residents, and a place where more tourists will spend their vacation cash.
Lawmakers even had a flashy name for their committee – the “Statewide Tourism and Recreational Water Access and Resource Sustainability Special Committee” or STARWARS, like the movie with Yoda and the gang.
Cue the theme song. The list of proposed projects was big and expensive – $500 million to $1 billion for a new lake between Omaha and Lincoln; more than $40 million for a new marina and better roads at popular Lake McConaughy; a fancy $34 million lodge at Niobrara State Park; and $41 million in improvements at Lewis & Clark Lake.
“This is big thinking … very visionary,” said then-State Sen. Mike Flood, now a U.S. congressman.
Then-Sen. Mike Hilgers, now the state’s attorney general, led the charge for STARWARS, calling it a once in a generation opportunity to take “a big swing.”
Fast forward to now, and the big swing with lightsabers has mostly been a whiff.
Much of the big spending called for by the STARWARS committee, and later approved by the Legislature, is proposed to be clawed back by Gov. Jim Pillen.
He’s no Darth Vader, but the state’s forecasted tax revenue is less than needed to run state government – in large part because of generous income tax cuts passed in 2023.
The governor also wants to continue his push for property tax relief by devoting another $400 million to that over the next two years.
You recall those income tax cuts, pushed by the state chamber and other business groups in the name of “remaining competitive” with our neighboring states.
They will, by 2027, reduce the state’s top individual income tax rates from a high of 6.84% to 3.99%. Corporate income tax rates are also falling, from 5.58% to 3.99%.
But the bottom line is those tax cuts will reduce state tax revenue by nearly $1 billion by 2027.It’s like taking a big cut in pay and figuring out how to make ends meet without it.
One way is to eliminate spending on “wants” like the big lake and marinas. As Pillen often says, we need to focus on “needs” not “wants.”
The big lake idea went kaput last fall when a study confirmed what a lot of authorities had said about building a huge sandpit in a floodplain – it’s not feasible.
But tourism and economic development officials, recently, urged state lawmakers to restore funding for the work at Lewis & Clark and Lake Mac.
In Ogallala, they say summer is when “the license plates turn green.” That’s because of the influx of Coloradoans to the white sand beaches of Lake McConaughy. Better roads are needed there, they said, to keep those out-of-state dollars rolling in. In northeast Nebraska, officials have fretted for years about the lack of development on the Nebraska side of Lewis & Clark Lake. Most of the tourism dollars are spent on the South Dakota side of the reservoir, where there’s a major marina, several restaurants and stores, and a major town, Yankton.
Don’t get me wrong, I’m a big fan of recreation. But if there’s an economic opportunity, can’t that be taken care of by private investment? Does the state always have to pass a tax break or spend a bunch on new amenities to get developers to build something or a new business to locate here?
State lawmakers touted the big income tax cut as a way to attract new residents – an argument not borne out by most studies, which indicate that better-paying jobs lure most movers, followed by changes in a family situation, such as a divorce or retirement.
As with a lot of things, we’ll find out later if grounding STARWARS was a bad idea or not. Meanwhile, may the force be with you.
