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Legislative Update – April 27, 2017
Senator Roy Baker – District 30
It has been a rocky road these past few days – more on roads later in this column – and it is all due to debate on the biennium budget. The Appropriations Committee has spent months preparing the budget proposals. When the committee first began their internal discussions, those members agreed that three priority areas should not be targeted for cuts, in order to prevent irreversible damage to those programs.
The three areas prioritized by Appropriations make up the majority of the state budget. 44% of the budget is dedicated to K-12 and higher education. About 35-37% goes toward aid to individuals like Medicaid, provider reimbursements, etc. And the third area of priority, which takes about 10% of the state budget, is the court system, Corrections and the State Patrol.
First, K-12 education was set as a priority and no cuts were made to TEEOSA (state equalization aid). Any cuts to TEEOSA would push K-12 education funding needs to the property tax base. Also included in the education piece is higher education; the universities, state and community colleges. Having quality education from kindergarten through the college level feeds into work force development and a better economy. Any major cuts to higher education would mean students would see significant tuition increases rates. The University of Nebraska did take a $10 million reduction in aid.
The second priority is aid to individuals which comprises almost 37% of the budget. This includes Medicaid to the aged, blind, disabled, provider reimbursements and so on. Cuts to these programs would potentially impact the elderly in assisted living and nursing homes, low income families with children and their health care, rates to providers who care for the developmental disabled or those with mental health issues. The committee saw the need to protect this funding.
The last area deemed a priority was corrections, the courts and state patrol. The Department of Corrections is facing large overcrowding problems in state prisons and has been involved in Justice Reinvestment with more programing, more parole officers, and review of sentencing guidelines for certain offenses. The courts and jails did take a reduction of $9.2 million.
The remaining agencies in state government took anywhere from 4% to 8% reductions. Money from the state’s cash reserve or “rainy day fund” has also helped address the shortfall. Senator Stinner, the Chairman of the Appropriations Committee, stated that Nebraska is experiencing the 3rd lowest revenue growth rate in the last 36 years. Usually when there is low revenue growth, the state has a year or two of increased revenue growth to help recover. For the past three years, the state has seen low or negative growth. So the state never had the chance to recover from the previous down-turn.
On April 25th senators began the long discussion of where cuts should and could be made. The first contentious reduction made by the Appropriations Committee was cutting $30 million from the Department of Roads which has a $1.7 billion budget. This cut equates to a 1.75% reduction in the Roads budget. Part of the committee’s rationale was that in 2011, a law was enacted that took a ¼ cent of the state sales tax revenue, approximately $60 million, and dedicated it to roads. Since current funding to roads includes a portion of the state’s General Fund revenue stream, the committee deemed it appropriate to have this agency help in addressing the budget shortfall. An amendment offered by Senator Curt Friesen of Henderson tried to take money from a Medicaid cash transfer fund to replace the $30 million cut from roads. This amendment was defeated.
On April 26th the Nebraska Economic Forecasting Board came in with an additional $50 million shortfall. The committee and the full Legislature will again need to look at where more cuts can be made. A bill that would look at taxing internet sales is working its way through the legislative process and could have a potential revenue increase of $30-$40 million. However there is a court case that does not allow a state to require a business outside that state to pay sales tax. At the time the courts made these decisions, the internet was only just beginning. A point to be made is Nebraska residents have always been required to track their mail order or on-line purchases and to remit the sales tax to the state. The compliance with this law is marginal at best. Internet sales are hurting our main street stores in our communities. This bill would level the field
The Speaker of the Legislature ended the debate on LB 327, the budget bill, at 9 pm Wednesday night after it became stuck in extended debate on Title X women’s health funding. Some senators expressed concern that language in the bill could cut funding going to Planned Parenthood agencies in the state. These agencies provide basic women’s health services, including such things as cervical cancer screening and family planning services. State law does not allow any state or federal funds to be used for abortions. Senators from the opposing sides will get together before the next round of debate to try to reach a compromise.
The budget should be passed by May 10 and will go to the Governor for any potential line-item vetoes. At that point senators will once again have the opportunity to review those cuts and consider any over-rides we deem necessary.