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Governor Pete Ricketts gave his annual State of the State address this past week. His recommendations, along with the agency requests, will become the starting point as the Appropriations Committee, and then the entire Legislature, determines what mid-biennium budget adjustments need to be made.
To address the lowered revenue forecast projected by the Nebraska Economic Forecasting Advisory Board this past October, the Governor is proposing across-the-board cuts of 2% this fiscal year and 4% next year, as well as specific reductions. He has also recommended transfers of excess fund balances to the General Fund and a $108 million transfer from the cash reserve fund. These budget reductions come on top of significant cuts made last year when the state experienced a budget shortfall in excess of $1 billion. The Governor stressed that the budget was balanced last year without any tax increases, and his recommendations propose to do the same this year.
The Governor stated that the priorities in his budget include funding for K-12 education, Corrections, and services for those with developmental disabilities. He proposed to maintain funding for state school aid and included an additional $35 million to Child Welfare and Public Assistance for this year and next, after noting the 9% increase in the number of children in our child welfare system. He also mentioned the formation of a new child welfare task force to determine the root causes for this increase, such as the high number of parents using methamphetamine. The Governor recommended expanding the number of corrections officers and reinvesting $6 million to expand bed capacity in our prisons.
Growing Nebraska has always been one of the Governor’s top goals, and he emphasized that cutting and reforming taxes is a key factor in meeting this goal. Although the state has provided $840 million in property tax relief over the past four years, the Tax Foundation ranks Nebraska’s property taxes as 11th highest in the nation. Therefore, the Governor stressed that property tax relief was a top priority. To that end, he announced that Revenue Committee chair, Senator Jim Smith, will introduce the Nebraska Property Tax Cuts and Opportunity Act.
LB 947 contains three major components. First, it would eliminate the current Property Tax Credit Program which provides property owners a tax credit based on the valuation of their property and is shown on tax statements as a credit after full taxes are levied. It also proposes to eliminate the recently passed Personal Property Exemption Program. The legislation would use the funding from these two programs for a refundable credit on state income taxes for property taxes paid, which would ensure that Nebraskans, not absentee landowners, receive the credit. It also includes a trigger mechanism to provide for additional property tax relief in future years when actual tax receipts are higher than forecast projections. Next, the legislation permanently reduces the top individual and corporate income tax rate from 6.84% and 7.81%, respectively, to 6.69%. As I understand, the funding from the elimination of the Property Tax Credit Program and the Personal Property Exemption Program would also be used to fund the income tax rate decreases. Finally, the legislation provides an additional $10 million for workforce development.
Senators have been meeting in full day debate this past week, but will begin meeting only in the mornings starting January 16, as public hearings on every bill introduced will be held in the afternoons. January 18, the 10th day of the legislative session, is the last day that bills can be introduced.
I encourage you to contact me with your thoughts and opinions on the legislation that has been introduced. I can be reached at firstname.lastname@example.org. My mailing address is District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509 and my telephone number is (402)471-2733.
The Appropriations Committee submitted their budget recommendations this past week to the full Legislature by the 40th legislative day, as required by legislative rule. The appropriations bills must be passed by the 50th day, which falls on March 29th this year. The appropriations bills presented this year are mid-biennium adjustments to the two-year budget passed last year for fiscal years 2015/16 and 2016/17, resulting in a net increase of $4.2 million.
Although the financial status at the end of the current biennium remains similar to what it was at the end of the last year’s session, it has fluctuated greatly during the past year. The projected status went from a positive $2.3 million to a negative $110 million after the Nebraska Economic Forecast Advisory Board reduced revenue projections by $154 million last October. This was partially offset by a lapse of unexpended appropriations, reductions in Medicaid, and a $13 million net gain when the Forecast Advisory Board met again in February, resulting in the current positive financial status of $10.1 million. However the projected status for the following biennium shows a $106 million shortfall. This volatility shows the necessity for keeping a sufficient balance in the cash reserve fund.
The $10.1 million figure is the amount of revenue above the required 3% minimum reserve, which is available to fund legislation with a fiscal impact. The reality of this figure makes it apparent that any substantial tax relief will require a tax shift or significant cuts in spending. Due to significant opposition from cities and counties, the Governor’s proposal for property tax relief will most likely not advance from the Revenue Committee as introduced. The intent of LB 958 was to slow down the increase in agricultural land valuation by limiting the state-wide increase to 3 percent per year and to slow the growth of property taxes levied by the political subdivisions. A related bill, LB 959, sought to slow the growth of spending and property taxes levied by school districts. Likewise, it has not been advanced by the Education Committee at this time.
The Appropriations Committee recommended funding three one-time projects from the cash reserve, reducing the balance by $91 million to $655 million. The transfers include $27.3 million to the Department of Corrections for adding capacity to the Lincoln Community Corrections Center, $13.7 million for the modification of two federal levee systems that impact the Offutt Air Force base, in an effort to help secure federal funding to rebuild Offutt’s deteriorating runway and keep the 55th Wing in Nebraska, and under LB 960, $50 million to fund the newly created Transportation Infrastructure Bank.
LB 960, as amended by the Appropriations Committee, creates three new programs funded by the $50 million transfer from the cash reserve fund. It also commits $400 million in additional fuel tax revenue generated by LB 610, passed by the Legislature last year. The Accelerated State Highway Capital Improvement Program will provide up-front money for major highway projects including the completion of the expressway system. The County Bridge Match Program will promote innovative solutions and provide additional funding to accelerate the repair and replacement of county bridges. Finally, the Economic Opportunity Program will finance transportation improvements to attract and support new businesses and business expansions.
Included in the budget recommendations, are amended versions of two of my bills. The first would provide a one-time $1.5 million appropriation to help with recruitment and retention of correctional staff, particularly at the Tecumseh State Correctional Institution. The other extended the current appropriations for deferred maintenance, repair, renovation and facility replacement construction projects at the three state colleges, thereby allowing for the Theater/Event Center project at Peru State College to proceed.
As legislators discuss the budget and other priority bills, I encourage your input. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number is (402) 471-2733.
The Legislature has 13 days left in this legislative session, with the 90th legislative day set for June 5. This past week, senators gave the budget bills second-round approval. The budget is now ready for Final Reading.
As I mentioned last week, the Nebraska Economic Forecasting Advisory Board increased their projections for the next biennium by $9.7 million. The Appropriations Committee recommended the dedication of $8 million of the projected increase to the Property Tax Credit program. With the added $4 million each year, bringing the increase in the program to $64 million annually, taxpayers will see a total of $204 million per year in direct property tax relief. This credit is reflected on annual property tax statements. The Legislature approved the committee’s recommendation, prior to advancing the budget bills.
There were several other changes to the budget that were recommended by the Appropriations Committee and approved by the entire Legislature during Select File debate. Appropriations were updated for the multi-year project to replace the heating, ventilating, and air conditioning system at the State Capitol, based on continued planning and a better estimate of costs. A geothermal system has been identified as the preferred option, instead of contracting with the University of Nebraska for chilled water. Although it will cost more initially, it is expected to be more energy efficient in future years.
Funding was added to the budget for the Nebraska Developing Youth Talent Initiative. This initiative requires the Department of Economic Development to fund two pilot programs that are targeted to businesses in the manufacturing and technology sectors for two years. Grants would be provided to private sector for-profit entities, one of which must be in a rural area. This initiative will develop an industry-led partnership with schools to assist in specific career learning opportunities in manufacturing and technology sectors.
The Legislature gave first-round approval to a bill that was prioritized by the Revenue Committee. LB 259 would exempt from property tax the first $10,000 of valuation of depreciable tangible personal property in each tax district in which a personal property tax return is required to be filed. Although this wasn’t as comprehensive of a tax relief plan as some senators had hoped, it is estimated that it will provide for an average decrease of $162 in the personal property tax bills for business owners, farmers and other taxpayers.
The Legislature gave LB 610 final approval this past week on a 26-15 vote, with eight senators not voting. LB 610 proposes to increase the gas tax by a total of six cents over a four-year period. Revenue from the gas tax, which has remained flat over the past 20 years, has not kept up with the cost of road construction. The increased revenue is to be divided between the state Department of Roads, counties and cities, to be used for necessary road and bridge projects. Since the Governor has vetoed LB 610, the Legislature will need to override his veto if the tax increase is to take effect. Thirty votes are required on a motion to override, which is four more votes than given on final reading. I voted against LB 610, as I would prefer an increase in the current amount of sales tax dedicated to roads over a gas tax increase.
We have been working through the lunch hour and into the evening in an attempt to debate every priority bill. If you have any comments on the legislation that is still before us, I encourage you to contact me. 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 is (402) 471-2733.
The budget bills, as proposed by the Appropriations Committee, were debated by the Legislature this past week and were given first-round approval. The budget bills consist of 8 bills, including the mainline budget bill that appropriates funds for state government expenses, legislation to appropriate funds for capital construction, to provide for fund transfers, including those from the Cash Reserve, to provide for deficit appropriations, and legislation to appropriate funds for the salaries of the Legislature, constitutional officers and the Supreme Court judges.
General Fund appropriations total $4.26 billion in fiscal year 2015-16 and $4.37 billion in fiscal year 2016-17. This translates to a 3.8% spending increase in the first year of the biennium and a 2.4% increase in the second year, for an average 3.1% increase over the two-year period. This represents the third lowest spending growth in the last 30 years, with the lowest spending increases occurring during the recession.
Almost $49 million is available, above the required minimum 3% reserve, after funding the budget bills. This amount will be used to fund bills that are currently going through the legislative process.
The General Fund appropriations are divided into four categories. Agency Operations, which includes the University of Nebraska and State Colleges, the Department of Health and Human Services, the Department of Correctional Services, and the courts, as well as more than 40 other state agencies, represents 35.5% of the budget. State Aid to Individuals, amounts to 31.6% of the budget, and includes funding for Medicaid and other public assistance, Developmental Disabilities aid, and Behavior Health aid. State Aid to Local Governments, amounting to 32.3%, includes funding for state aid to school districts, special education, aid to community colleges and homestead exemptions. The final category, Capitol Construction, makes up just 0.6% of the budget.
Appropriations Committee members made a conscious decision to keep the Cash Reserve Fund balance at approximately 16% of General Fund expenditures. The Cash Reserve Fund is used to provide protection against forecast errors and to provide for supplemental funds during a recessionary period, which proved necessary during recent years. The Appropriations Committee did approve transfers from the cash reserve fund for four “one-time” projects, including funding for a child welfare system fine from the federal government, a court ordered settlement to Kansas relating to the Nebraska Republican River Compact, $25 million for the construction of the Global Center for Advanced Interprofessional Learning at UNMC, and $8 million for a grant program to contract for reduced-fee and charitable oral health services and for oral health workforce development with the Creighton University School of Dentistry. After senators questioned the funding that was directed at Creighton University, the language was amended so that the funding could also be utilized by the University of Nebraska Medical Center College of Dentistry.
The $60 million in increased annual funding to the Property Tax Credit program remained intact in the budget. This allows for a credit equal to $93.33 per $100,000 of valuation for property owners, up from $65.33 in the current year.
The Nebraska Economic Forecast Advisory Board also met this past week. Because it was predicted that board members might reduce their revenue projections for the next biennium, the Appropriations Committee was prepared to begin meeting immediately to discuss potential reductions in our budget recommendations. However, the Board did not alter the forecast significantly and actually increased it by approximately $9.7 million over the next biennium.
If you have any comments on the budget bills that are going through the legislative process, I encourage you to contact me. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My telephone number is (402) 471-2733 and my email address is email@example.com.
The One Hundred Fourth Legislature, First Session, is up and running and at a whirlwind pace. Although this past week has been a lot of pomp and circumstance with the swearing in of the newly elected senators, the inauguration ceremonies for the constitutional officers and the Governor’s inaugural address, senators have also been busy moving into their new offices and selecting what committees they will serve on for the next two years.
In his first speech to the Legislature, Governor Pete Ricketts revealed his top goals for the state. As part of his pro-growth agenda, he emphasized bolstering the economy by creating more and better paying jobs, cutting property taxes, reducing unnecessary state and federal regulations, and strengthening the state’s education system.
On the first day of session, senators elected committee chairpersons. I ran for and was elected as the vice chair of the Executive Board. Senator Bob Krist of Omaha was elected as chair. The Executive Board manages the Legislative Council, which consists of the offices of the Clerk of the Legislature, Accounting and Budgeting, Fiscal Analyst, Research, Ombudsman, Performance Audit, and Revisor of Statutes. The Executive Board makes the final decision as to what committee every bill is referenced to, makes appointments to various task forces and commissions, and holds hearings on bills referenced to the committee.
I was also selected to serve on the Appropriations Committee. This committee is responsible for reviewing budget requests and presenting a budget recommendation to be considered by the full Legislature. The primary constitutional duty of the Legislature is to pass the state budget. Due to the workload of the committee, it meets every afternoon of the week. I hope that my experience and talent gained from the business world will prove useful as we begin our work on the budget process.
Senators will continue with bill introduction for the first ten days of the legislative session. Public hearings, held on every bill introduced, will be held during the afternoons, beginning later this month. Senators will meet in session during the mornings. After every bill has a public hearing, then the Legislature will begin meeting in full-day session.
I want to make you aware of the Legislature’s website, which contains a wealth of information for viewers. You can read biographies on the new senators, review the bills that have been introduced and even watch the Legislature live. The website is nebraskalegislature.gov.
Although I will be in Lincoln for long hours during this 90-day legislative session, which is scheduled to adjourn on June 5, I will still try to attend as many events in the district as I can. If you are ever in the Capitol, make sure to stop by my office. I have moved to Room 2000, which is located on the second floor, north side.
If you have any questions about state government or would like to voice your opinion on a legislative bill, I urge you to contact me. Only with your input, can I truly represent the constituents of District #1. 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 is (402) 471-2733. If I am unavailable, my staff will be able to assist you. Tim Freburg is my administrative assistant, who answers the telephone and handles my calendar. Kim Davis is my legislative aide who works on constituent issues and legislation.
According to the legislative rules, the Appropriations Committee must place appropriations bills on General File by the 70th day in a 90-day session or the Legislature reverts to the Governor’s budget proposal. The budget bills were reported to the floor on May 1, which was the 70th day, and must be passed by the 80th legislative day, which falls on May 20.
The Appropriations Committee has proposed a budget of $3.8 billion the first year and $4 billion the second year of the biennium. This represents a 5.5% growth in the first year and a 4.8% growth in the second year, for an average of 5.2%. The primary differences between the Governor’s budget proposal, with an average increase of 4.9%, was that the committee recommended a higher level of state aid funding for K-12 schools and appropriated additional contributions to the defined benefit retirement plans for school employees, due to a projected actuarial shortfall.
At the end of the 2012 legislative session, a $619.4 million shortfall from the required minimum 3% reserve was projected for the 2013-2015 biennium. Since that time, the projected shortfall has switched to a positive $50 million, due to higher revenue forecasts by the Nebraska Economic Forecasting Advisory Board and lower spending projections, including proposed alterations to the state aid formula for K-12 schools. This means that approximately $50 million is available for new legislative proposals.
The cash reserve fund is projected to have a balance of $625 million at the end of the next biennium. This is the fund that allowed the state to recover from the recent recession without major damage to programs and services or the necessity of a tax increase.
The budget is broken up into 3 major parts. Approximately 34% of the budget is dedicated to the funding of agency operations. This includes funding for the University, State Colleges, the Department of Health and Human Services, the Department of Corrections, the State Patrol, the court system, and dozens of other agencies. Another 32% is for state aid to individuals, which includes funding for persons qualifying for Medicaid, child welfare, public assistance, and those with developmental disabilities. The last 34% of the budget is devoted to state aid to local governments, which includes school districts, special education, community colleges, and funding for the homestead exemption.
The Legislature gave first-round approval this past week to LB 93, which allows for the notation of the word “veteran” on a driver’s license or a state identification card. In order to implement this voluntary privilege, the Department of Veterans Affairs would create a registry to determine eligibility for use by the Department of Motor Vehicles. The intent is to make it more convenient for persons to identify themselves as veterans, as they must now show their discharge papers, which are cumbersome to carry and contain confidential information.
As advanced from the Transportation and Telecommunications Committee, LB 93 also proposed to create the Military Honor license plate. Unfortunately, Senator Ernie Chambers pledged to fight this provision, so due to time constraints in the remaining days of this legislative session, the proposal was amended out of the bill and will be taken up next year.
Senators gave second-round approval to LB 517, which would create a Water Funding Task Force. The task force would be charged with the development of a 20-year strategic plan for water sustainability. They are to present the recommended plan, along with a funding proposal, in time for the Legislature to discuss it during the 2014 legislative session.
As the Legislature discusses the budget and other bills of interest, I welcome your input. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My e-mail address is email@example.com and my telephone number at the Capitol is (402) 471-2733.