- Associated Press - Sunday, January 3, 2016

LINCOLN, Neb. (AP) - Gov. Pete Ricketts will push for a new property tax relief package when lawmakers reconvene this week as well as a $26 million proposal to add more beds to Nebraska’s overcrowded prison system.

Ricketts acknowledged that major tax reforms will have to come “one step at a time” over many years.

But the Republican governor expressed confidence that he and lawmakers will make progress despite a short legislative session, a looming budget shortfall and millions of dollars in urgent funding requests from state agencies.

“We need to do tax relief every year and constantly work to bring down the cost of government so we can have that tax relief,” Ricketts said in an interview with The Associated Press. “The only way you get that sustainable tax relief is by controlling the growth of government.”

Ricketts said his budget recommendations to lawmakers will include a $26 million request for additional beds at community corrections centers in Lincoln and Omaha. The proposal seeks to ease chronic overcrowding with a net increase of 48 female beds and 100 male beds.

The state’s community corrections centers are designed for lower-security inmates, with programs focused on counseling, treatment and work release. The rehabilitation programs are widely viewed as a key to lowering the prison population by reducing the number of inmates who reoffend.

Ricketts said both proposals will fit into his recommended budget to lawmakers while allowing the state to balance its books. He declined to give specifics but didn’t rule out tapping the state’s record-high cash reserve, which is expected to hit nearly $729 million by June 30. Ricketts has previously argued that the rainy-day fund is too large.

Nebraska faces a projected $110 million revenue shortfall that the Legislature will have to address this year. The estimate could grow by roughly $12 million because of payment errors made by the Nebraska Department of Health and Human Services.

The department was one of 17 state agencies that have asked for additional money, including a $1.2 million request from the attorney general’s office for legal costs related to the Republican River.

“Certainly, we’ll have to operate within the constraints of the budget,” Ricketts said. “But it’s absolutely doable.”

Speaker of the Legislature Galen Hadley said he believes lawmakers will be able to enact some property tax reductions and prison reforms this year.

“I think they’re both very important,” said Hadley, of Kearney. “We need to take another step forward on property taxes, even if it’s small. It might be a difficult time to do it, but we need to show the people of Nebraska that we’re serious about the problem.”

Hadley said adding community corrections beds in the prison system could save money over the long term because it could help avoid the need for a new prison or federal intervention if facilities became too crowded.

“They key is to take action now, rather than waiting until it’s forced on us,” Hadley said.

Adding to the budget challenge is the short, 60-day session, which gives lawmakers and Ricketts less time to find a solution.

The budget-writing Appropriations Committee will look at several options to balance the budget, including tapping the state’s cash reserve, said Sen. Heath Mello, the committee chairman.

“It’s a sizable challenge for us,” said Mello, of Omaha. “We’re going to have to do it together, and it’s going to require an awful lot of compromise.”

Sen. Mike Gloor, chairman of the Revenue Committee, said he expects legislation that would slow the rapid growth of taxable property values, which forced farmers and ranchers to pay more when land prices soared. At the same time, he said lawmakers will need to take steps to ensure that local government budgets - fed by property taxes - don’t grow too quickly.

“It’s really got to be a one-two punch,” said Gloor, of Grand Island. “The solutions we come up with need to be ones that are sustainable, year after year.”

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