Nebraska Constitutional Amendment Number 2 (2006)

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Nebraska Amendment 2 appeared on the November 2006 general election ballot in Nebraska as a legislatively-referred constitutional amendment, where it was defeated.

  • Yes: 221,499 (43.1%)
  • No: 292,456 (56.9%) Defeated

Impact

The measure was sponsored by Nebraska state senator Chris Beutler[1], from Lincoln. It was defeated, with support from only 221,499 voters (43.1%). This measure would have amended Article XI-1[2] of the Nebraska Constitution to allow cities, counties, school districts, and other political subdivisions of the state to invest endowment funds they own into the private sector, i.e. stocks, with the hope of increasing their annual rates of return.

Objectives of the initiative

The primary objective of this proposition was to enable the Community Health Endowment of Lincoln (CHE)[3] to invest its assets into stocks, with the expectation that its rate of return would be substantially increased. The CHE was formed in 1998 from the sale of publicly-owned Lincoln General Hospital to the privately-owned Bryan Hospital[4], and at the end of fiscal year 2006, it was worth $49,918,720[5] (see page 14 of attached document). There are very few public endowment funds owned by political subdivisions of Nebraska, and this is by far the largest. The CHE has been allowed to increase annually slightly faster than the rate of inflation, and additional interest and donations, averaging approximately $1 million annually[6] (see page 2 of attached document), have been used for various community health purposes.

Arguments for the initiative

  • Enabling the CHE to invest in higher-return investments will increase its ability to improve public health care in Lincoln, at no additional expense to the taxpayers.
  • Passing the amendment might encourage other communities to form and develop high-return endowment funds, similar to the CHE, and likewise improve their community services at little expense to the taxpayers.

Arguments against the initiative

  • Private individuals and entities have much more incentive to invest wisely and profitably than government entities, as a failed private investment results in an obvious loss of wealth to the invester, whereas if a publicly owned, or government, entity, such as the CHE, fails in an investment, the government can simply raise taxes to recoup the loss, and the only real losers are the taxpayers. Therefore, government entities should not be allowed to keep and invest an excess of public money, much less in potentially risky stocks, but should cut taxes if they have too much money.
  • Some opponents think that the best way to improve Lincoln's health care into the future would be to return the value of the endowment fund to the taxpayers, who would then be able to invest the money from the tax refund, or tax cut, to create wealth with it, and in the following years, the increase in the net wealth of residents of Lincoln would be taxable, in one way or another, and would have the same impact as freeing up the CHE to invest in stocks.

Campaign finance

Donors for the campaign for the measure:[7]

  • NEBRASKANS FOR AMENDMENT 2 COMMITTEE: $21,188
  • Total: $21,188

External links

References

  1. ↑ http://www.journalstar.com/articles/2006/10/08/local/doc4528236cbbe78108869260.txt
  2. ↑ http://ballotpedia.org/wiki/index.php?title=Nebraska_Constitution#Article_XI-1
  3. ↑ http://www.chelincoln.org/
  4. ↑ http://www.journalstar.com/articles/2006/10/08/local/doc4528236cbbe78108869260.txt
  5. ↑ http://www.chelincoln.org/06About/anlrpts_pdf/8Anlrpt%20Bold%20Ideas%202006-07.pdf
  6. ↑ http://www.chelincoln.org/pdf/Amendment2.pdf
  7. ↑ Follow the Money, "Donors"
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