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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 firstname.lastname@example.org.