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The Appropriations Committee, on which I serve, voted unanimously to send the main budget bill to the full Legislature. The two other bills that are part of the budget package, dealing with the cash reserve and funding transfers, were advanced on an 8-1 vote. Debate on the budget will begin Tuesday, March 13. The $8.8 billion budget for the biennium represents an average spending growth of just 0.5% over the two year period.
At the end of the 2017 session last May, the Legislature passed a balanced budget for the upcoming two fiscal years. Since that time, increases in child welfare costs, a lower than expected federal Medicaid match rate, and a significant reduction in revenue forecasts last October resulted in a budget shortfall of approximately $200 million. In his budget recommendations in January, the Governor proposed across-the-board reductions of 2% for the current fiscal year and 4% for next fiscal year. Primarily due to increased revenue projections from the Nebraska Economic Forecasting Advisory Board last month and use of the cash reserve fund, the Appropriations Committee was able to reduce the proposed cuts for next year from 4% to 2% for most state agencies and to 1% for higher education.
The budget figures are based on the passage of LB 1090, which received first-round approval this past week from the Legislature. Nebraska’s income tax system is linked to the federal income tax system. Consequently, the passage of the federal Tax Cuts and Jobs Act would have resulted in an increase of revenue for our state. LB 1090 changes Nebraska’s tax codes by restoring the state’s personal exemption tax credit to offset income gained from the federal tax changes and thereby eliminate any resulting tax increase to Nebraska taxpayers.
Although the cash reserve is left with a nearly $300 million balance, this is notably lower than several years ago. Even though the purpose of the cash reserve or “rainy day” fund is to help in years of budget difficulties, senators will need to work in future years to replenish this fund.
My priority bill, LB 44, received second-round approval this past week. This legislation would put Nebraska in a position to start collecting sales tax from remote on-line sellers, should the Supreme Court overturn a dated ruling stating that companies must have a physical presence in the state to be required to collect the sales tax. States are losing out on millions of dollars of revenue that is owed by the purchaser (if not collected by the seller), but is seldom paid.
LB 861, an Appropriations Committee priority bill, received first-round approval from the Legislature this past week on a 27-0 vote. It would require the state to pay for costs of prosecution in counties with state correctional institutions if such costs exceed a certain threshold. I introduced this bill in an effort to provide a safety net for Johnson County residents, to ensure that if costs associated with incidents occurring at the Tecumseh State Correctional Institution get too high, the state will pitch in and help with the costs.
Legislation received first-round approval this past week that would strengthen the car safety seat requirements for the first time since 2002. Current law requires any child up to 6 years of age to be secured in an approved child safety restraint device. LB 42 would increase the age limit from “up to 6 years” to “up to 8 years”, would require children up to 2 years of age to use a rear-facing device, and specifies that the car seat should be placed in the rear seat of a vehicle, when possible. The American Academy of Pediatrics has recommended that all infants and toddlers ride in a rear-facing seat until they are at least 2 years of age, as they are significantly less likely to be seriously injured in a crash than if forward-facing.
As the Legislature begins debate on the budget and other bills, I again encourage your input on issues before us. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is firstname.lastname@example.org and my telephone number at the Capitol is (402) 471-2733.