The days of big tax cuts appear to be over in Nebraska as the state braces for the effects of the free-falling national economy.

Gov. Dave Heineman presented his budget to Nebraska lawmakers Thursday amid the toughest economic climate in decades. The stock market is plummeting, tax revenue is falling and “state government must tighten its belt just like Nebraska families and businesses are doing,” Heineman said Thursday.

Heineman isn’t calling for any tax increases. State spending would increase by an average of just 1.8 percent each of the next two years, versus an average of 7 percent over the past two decades.

Heineman said he’s being realistic. His budget assumes the state won’t bring in any extra money in tax receipts during the next fiscal year, despite earlier estimates from an economic forecasting board that tax revenues would bring in an additional $49 million.

Heineman vowed to fund a $230 million property tax credit program over the next two years. The fund, established two years ago, gives lump sums of money to local governments, which provides property tax credits to homeowners.

Heineman said the state’s priorities should be education and programs for vulnerable children and families. But even those areas could suffer in the upcoming fiscal year, which starts July 1.

For example, Heineman promises an additional $100 million for state aid to schools over the next two years. But that falls $130 million short of the increases in funding called for in the state aid formula, which determines how much money schools get from state government.

One of Heineman’s proposals, a bill to be introduced by Sen. Mike Friend of Omaha, is sure to be welcome news for those confused by the state’s two-pronged method of taxing gas.

Heineman wants the Legislature to set the fuel tax at 26 cents a gallon and ditch the so-called variable portion of the tax. That portion changes twice a year to ensure that the amount of money flowing to road construction meets levels budgeted by lawmakers.

Heineman’s budget calls for a dip into the state’s cash reserve, which is expected to hold a record $593 million at the end of this fiscal year. Heineman proposes using $40 million each of the next two years, and holding $200 million for contingencies, most of that because of the possibility that the falling stock market will deflate the state’s pension plan.

Heineman also proposes that if state agencies spend less than budgeted, they be allowed to keep the remainder for the following year. That’s not how it works now, and Heineman said it leads to agencies spending the money so they don’t lose it.

A bill from Sen. Gwen Howard of Omaha and Sen. Tim Gay of Papillion being introduced at Heineman’s request is meant to address the problems brought to light by the state’s ill-fated safe-haven law. The law was designed to protect newborns from being dumped in trash bins but didn’t include an age limit when the Legislature first passed it last year. From September through November, 36 children were abandoned at Nebraska hospitals. None was an infant; most were preteens and teenagers as old as 17.

It took a rare special session of the Legislature, in November, to change the law, limiting it to children 30 days old or younger.

Many said it illustrated a deeper problem of older children lacking access to emergency services in the state.

Heineman’s proposal includes a hot line for families, referral and follow-up services and voluntary case management for foster parents and adoptive parents.

What do you think of Gov. Heineman's budget plan?

Sen. Ben Nelson said Wednesday he shares public concerns about any further commitment of federal funding to financial bailouts.

“Many people are very uneasy about committing any more tax money, and that includes me,” Nelson told his weekly telephone news conference.

Unaccountable distribution of the first half of an authorized $700 billion package raises “serious concerns about how the money was spent,” he said.

Nelson criticized the Bush administration’s decision to simply hand out the money in “payments to banks” rather than use it as originally agreed to free up credit by relieving financial institutions of bad assets.

“There was no transparency the first time,” Nelson said. “That was a blank check.”

President-elect Barack Obama is seeking congressional release of the second $350 billion in the bailout package for expenditure in a more directed and accountable manner.

Obama made a personal appeal to Senate Democrats at the Capitol on Tuesday for approval of the expenditure.

“I’m very pleased with (his) outreach to Capitol Hill,” Nelson said. Obama listened carefully to concerns raised at the Democratic caucus, he said.

Nelson said he’ll speak Thursday with Treasury Secretary Henry Paulson about the Bush administration’s use of the first $350 billion.

That, he said, is an effort to exercise “due diligence to see how the first money was spent before we can talk about the second installment.”

On another topic, Nelson said he wants a massive new economic stimulus package to center on creation and retention of jobs.

And that points to infrastructure development, he said.

Federal money directed to the states “should add to, not replace, existing funds,” Nelson said.

Should Congress approve spending the second half of the $700 billion bailout package?

Mayor Chris Beutler is expected to announce this morning that a public vote on financing for the West Haymarket Arena will be put on hold for now.

Beutler and University of Nebraska-Lincoln Chancellor Harvey Perlman have scheduled a 10:45 a.m. press conference to give an update on the arena.

The city had hoped to bring the issue to voters this spring as part of a timeline that would have the roughly $200 million arena open for business by 2012.

The sources, who requested anonymity, said the economy and the related credit crunch have made it nearly impossible to get solid commitments on potential financing for the arena in time for a vote this spring.

One potential plan that would have sports marketing company IMG College privately finance the arena is still on the table, the sources said. But IMG needs more time to evaluate potential financing sources.

Even if the IMG plan comes to fruition, the city would still need to spend tens of millions of dollars to build parking garages and update roads and infrastructure at the site.

Is delaying the arena vote a good move?

Lincoln Sen. Ken Haar believes workers need to know why they’re being fired, especially in today’s economy with downsizing and layoffs.

To that end, he introduced a bill on Friday that would require an employer to give a specific reason for termination. It would also give employees getting pink slips meaningful opportunities to present their responses to the reasons for the termination.

Haar said the proposal came out of the education arena, and is aimed at workers not covered by contracts.

“It’s simple, it’s good business practice,” he said. “It’s a fairness issue.”

Haar said he doesn’t know how often it happens that people aren’t given reasons for losing their jobs, but he knows it happens. And some of those people will come to the hearing this session to testify.

The bill has been tried before, but in the rush of other legislation hasn’t gotten too far, he said.

In 2006, Sen. Jeanne Combs of Milligan introduced a bill that proposed no public employees would be fired until they had been given a reason and the employees had the opportunity to reply. That time, the bill never made it out of the Business and Labor Committee.

Should employers have to explain why they're firing someone?

A seat belt proposal that never clicked when Ernie Chambers was in the Nebraska Capitol has a better chance of finally becoming law this year.

On Friday, state Sen. John Harms of Scottsbluff introduced a bill (LB106) that would allow police to pull over drivers who aren’t wearing seat belts. Currently, drivers can be ticketed for not wearing seat belts only if they have first been pulled over for other infractions.

Chambers, who was pushed out of the Legislature this year by term limits, opposed so-called “primary’’ seat belt laws because, he said, they would give police an excuse to pull over minorities.

Should police be able to pull drivers over for not wearing seat belts?

About half of all states have such a law.