FOR IMMEDIATE RELEASE
Monday, March 22, 2010
Contact: Matt Boever
Phone: (402) 471-2929
Lincoln, NE—Greetings from your State Capitol. On March 16 the Legislature advanced LB 935, the primary budget bill this session. Two days later, on March 18, senators gave the budget second-round approval. In this week’s Capitol Update, I would like to focus on the proposed solutions in LB 935 for balancing the current budget; I would also like to address some of the expected future challenges.
The Nebraska Economic Forecasting Board, which determines revenue figures used by the Appropriations Committee to craft the state’s budget, met in February and reduced their two-year revenue projections by $31.7 million. Some additional funding demands have compounded these revenue losses: $15.2 million in supplementary state aid to schools and $3.6 million to compensate local subdivisions for property tax revenue due to homestead exemptions.
LB 935 addresses the revenue shortfall and increased funding demands. The bill calls for an additional 2 percent cut totaling $7.1 million from the same operations and aid programs that received a 5 percent across-the-board cut during the 2009 special session. Select appropriations pertaining to education, health care, and law enforcement will not be subjected to cuts. Along with cash fund transfers from the Securities Act Cash Fund, the Department of Insurance Cash Fund, the Affordable Housing Trust Cash Fund, and the Clerk of the Legislature Cash Fund, LB 935 accomplishes the goal of balancing the state budget this year, at a difficult financial time, without any tax increases.
Much of the discussion during the debate on LB 935 rightfully focused on the upcoming fiscal years. Even with the passage of LB 935 and assuming above-average revenue growth in the coming years, the state budget will experience a shortfall of $670 million in the next biennium. Among the major challenges will be replacing the federal funds that were used for TEEOSA state aid to schools. One bright spot, though, is the $321 million Cash Reserve Fund balance that is projected to be carried forward from the current biennium into the next. This surplus in the state’s savings account could help alleviate the projected shortfall.
Nevertheless, even assuming revenue receipts come close to meeting the optimistic projections, more tough decisions will be in order. Just as in the 2009 special session, when the Legislature cut the budget by $334 million, all options for prioritizing services and streamlining government will again be on the table.
As always, I welcome hearing from you, and if I can ever be of assistance to you or your family, please feel free to contact me by phone at (402) 471-2929, via e-mail at mflood@leg.ne.gov, or by mail at District 19, State Capitol, P.O. Box 94604, Lincoln, NE 68509-4604.
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