
By Senator Bill Avery
Last October, my colleagues and I were alarmed to learn of a sharp 11.2 percent downturn in September tax receipts. The State Forecasting Board estimated the two-year budget we approved last spring would eventually be $334 million in the red because of diminished revenue.
After a valiant resistance, Nebraska had finally fallen victim to the national economic downturn. The Governor quickly called a Special Session of the
Unicameral. After some late nights and extraordinary efforts by the Appropriations Committee, I am happy to report my colleagues and I produced a sensible, fiscally-responsible budget that reduces spending without raising taxes.
Cutting the budget is ugly, unpopular work and it is a task that no state senator relishes. We attempted to spread the pain around evenly, including here in the legislature, where everything from travel expenses to computer upgrades are on the chopping block.
Because in the end, we’re all in this together.
Furloughs
During the Special Session, one of my main goals was to protect state employees. To that end, I introduced LR 4, a non-binding resolution that encouraged state agencies to utilize temporary leave without pay (known as furloughs) instead of layoffs when trimming personnel budgets.
It’s important to understand that I do not love the idea of cutting back hours for state employees. But when it comes to budget cuts, furloughs are better than layoffs, not only for workers but for state government as well. For one, furloughed employees continue paying back into the system through income and sales taxes, instead of simply falling off the grid. In this way, we cut the budget without exacerbating the very revenue shortfalls that got us here in the first place.
Furloughs can also produce the same fiscal savings as laying off hundreds of workers. By preserving those jobs, important state agencies will emerge from the recession better able to serve Nebraskans. The economic downturn will eventually swing the other way, and it is important to be prudent without
overreacting.
Furloughs represent a surgical approach to budgets cuts as opposed to blindly firing employees across the board – a scalpel instead of an axe.
Education
Despite the objections of some in my party, I was one of only a handful of Democrats who supported LB 5, the revised school aid formula. According to my calculations, aid to educational institutions represents half of all state expenditures. When a single expense comprises half of your total budget, it cannot be off the table when it comes time for cuts.
That said, education is our biggest expenditure for a reason – it is crucial to the future of our state. While schools were not spared, cuts came in the form of eliminating budgetary increases, rather than actual reductions. This will allow adequate time for schools to plan for the lean years ahead.
Rainy Day Fund
I’ve repeatedly been asked why we didn’t use the State Cash Reserve Fund to plug the budget gap. I realize this looks like an attractive option in the short
term. However, we are looking at the real possibility of even bigger budget shortfalls in the next biennium. And in these so-called “out” years, we won’t have federal stimulus money to rely on.
In other words, the rain is not over yet.
The 2012-2013 budget may require we tap into the reserve fund. Draining it prematurely would have simply been a Band-Aid, postponing the hard decisions for, at most, a few years. Leaving it alone gives us a cushion – emergency padding that can mean the difference between a crisis situation and a tolerable one.