While there are signs Nebraska’s economy is moving in the right direction towards recovery, including a drop in the unemployment rate, the June General Fund receipts show there is still work to be done. Receipts from that month were 10% less than officials had predicted. This in combination with the projected shortfall for next biennium’s budget (FY11-13) means we have our work cut out for us to balance the budget as required by the state Constitution.

To help understand the magnitude of the Legislature’s task, I’d like to explain where the money in the General Fund goes and therefore, where reductions will most likely be made. General Funds are largely distributed among three main categories: education, welfare, and law enforcement. State spending in these categories is as follows:

Education – $1.65 billion (aid to local schools, University of Nebraska, state and community colleges);

Welfare – $1.18 billion (Medicaid, food stamps, Beatrice State Development Center, etc.);

Law Enforcement – $272 million (state patrol, courts, and corrections).

These three areas comprise 91% of the state’s General Fund expenditures. Thirty-nine state agencies make up the remaining 9% of General Fund expenditures.

These numbers are useful to show where your tax dollars are spent, but it’s necessary to break down the numbers again to know how the money is spent. Generally speaking, General Funds are used for state agency operations, aid to local governments, and aid to individuals.

This year, approximately 37% of the General Fund will go to the operation of state agencies. This includes the salaries and benefits for state employees, building maintenance, office supplies, etc. Out of all the state agencies, 87% of funding in this category goes to the Departments of Health and Human Services, Corrections, and Revenue as well as the State Patrol, the Courts, and the University and State Colleges.

Aid to local governments utilizes about 35% of the General Fund. This can be described as spending for local governments and institutions such as cities, counties, and schools. Funds in this category are used for aid to schools, special education, community colleges, and property tax relief.

Finally, aid to individuals uses about 28% of General Fund appropriations. This includes funding for Medicaid, food stamps, student scholarships, and aid to quasi-governmental units such as area agencies on aging, mental health regions, and developmental disability regions.

Obviously, these are extremely sensitive areas to reduce spending. The cuts must be made so as not to compromise public safety/health or the education of our state’s children. It is a difficult task, but I believe it can be done. To view the entire FY09-11 biennial budget, go to www.nebraskalegislature.gov/reports/fiscal.php.

The Legislature and Governor Heineman have asked state agencies to make recommendations to reduce the budget by 10%. The Legislature will also hold hearings to explore ways to reduce state spending and I would like to ask for your help in this process. Please contact my office with any suggestions you may have to reduce the state budget.