By Joe Jordan on July 12, 2010

When a roomful of state lawmakers all but moaned and groaned recently about the State of Nebraska’s upcoming and possibly record setting two year $669 million budget hole, one state senator–who was extremely ill earlier this year–had a new reason to smile.

State Senator Rich Pahls of Omaha, who has talked and talked and talked and failed to push a plan to eliminate sales tax shelters (technically known as exemptions) that cost the state some $3 billion a year, sees a new opening.

Pahls wants to use the influx in sales taxes to eventually eliminate property taxes. So while the Speaker of the Legislature Mike Flood and one Committee Chairman after another wondered what they’ll have to cut to close the budget gap, Pahls who runs the Banking Committee, wasted no time tilting at his windmill which stretches from Benkelman to Blair. “I hope we’ll take a look at sales tax exemptions,” said Pahls. Flood didn’t miss a beat responding, “Nice to see you’re feeling better Senator Pahls.” Pahls missed several days of the last legislative session suffering from an auto-immune disease which hit him unexpectedly in January affecting his lungs and kidneys.

Officials in Lincoln say that when it comes to Nebraska’s budget mess it’s not hard to see how the state got here. First and foremost was the decision to get through the recession with stimulus money doled out by the Obama administration. Among other things $140 million went to education, $17 million to the Department of Corrections. The Legislative Fiscal Office notes that replacing the stimulus funds “accounts for 40% of the total increase in the budget.”

On Friday the budget took another hit when the state’s June tax receipts were added up and came out $35 million less than projected. Governor Dave Heineman (R) issued a statement noting the “further evidence of a bumpy road to a broad economic recovery.” Some legislators believe a special session to fix the budget is needed now, but the Governor isn’t ready to jump.

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