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This week in the legislature was all about the budget and the Department of Health and Human Services. Last Tuesday the legislature passed the three major budget bills – LB331, LB332, and LB327. I along with several other Senators had some strong reservations about the under lying assumptions utilized to create the budget. As a group we held a press conference on the steps of the State Capitol to voice our concerns. The major issue, in my opinion, is the overly optimistic revenue projections for the next biennium. The Appropriations Committee is operating under the assumption that we will see revenue growth of roughly 5% a year for each of the two years. Given the flat growth we experienced the past two years combined with my knowledge of the agriculture marketplace, I just don’t see that 5% growth in revenue is realistic. What this could mean is another large budget shortfall and quite possibly the need for a special session in the fall to either make draconian cuts or the push for tax increases as some Senators have suggested. I in no way want to raise taxes or have to make crushing cuts. That is why I feel we needed to make more cuts to the current budget instead.
A week ago, Friday, the Governor announced his first line-item veto. He cut a little over $11.5 million dollars from the State Capitol HVAC renovation project. According to the Governor, this will not stop the project from moving forward with current construction but it will need to have additional funding added to future budgets to complete the project. During the same press conference he clearly indicated that further vetoes were to follow. On Monday the Governor used this line-item veto authority to cut an additional $45 million dollars from the budget. With his earlier veto, the total amount of cuts to the budget equaled $56.5 million dollars.
By law, the Appropriation Committee has 24 hours to respond to the Governor’s vetoes. Tuesday morning the committee recommended that lawmakers restore $32.7 million back to the budget. An important point to know about this process is that the legislature only has the ability to vote for, or, against a specific line-item veto. We are not allowed to make dollar amount changes nor suggest cuts from other items of the budget that the Governor did not veto from the bill. For example, the first veto override vote was to restore $300,000 dollars to probation services. We as a body can only vote to restore the entire $300,000. We cannot change the amount to say restore $150,000 of the $300,000. Additionally, we could not have voted to take additional funds from the University or the Supreme Court, as several of the constituent emails I received suggested, as an offset to the items that were vetoed. As a body we voted to reject to restore the $300,000 in funding for probation services.
The large portion of the day’s session was the debate to restore $32.5 million dollars for Medicaid and people with developmental disabilities. As a package the body did not vote to override the veto. Several amendments offered by individual Senators looked to override individual line items of the $32.5 million dollars. A majority of these amendments were pulled by the Senator who introduced them. Other efforts to amend did not get the required 30 votes to override the Governor’s veto. The debate was highly emotional and these were not easy decisions. There was a considerable amount of misinformation and fear mongering during the debate. My decision not to override the Governor’s vetoes was based on research and subsequent conversations I had with fellow Senators, the Policy Research Office, and the Department of Health and Human Services, and not as a result of the Governor’s pressure as some of my fellow Senators tried to imply.
We requested and received from the Department of Health and Human Services the real impact theses line-item veto cuts would have on their department and more importantly the people they serve. I wanted to share with you some of their response to our requests.
They noted that Legislature passed LB 327, which appropriated $1.69 billion dollars for the two-year funding for Nebraska’s Medicaid program. Governor Ricketts made a line-item veto of $11.8 million in each of the two fiscal years. That is just $23.6 million out of a 1.69 billion dollar appropriation. This equated to a 1.4% percent reduction in each fiscal year. According to DHHS, the line-item veto of funding in the Medicaid aid budget will not mean providers will receive across-the-board rate reductions. The Medicaid aid budget is a block appropriation based on forecasted need and the department has the responsibility to manage the program within its appropriation and minimize adverse access-to-service issues for Medicaid eligible individuals and families. Additionally, the veto does not impact services not covered by Medicare like long-term care, nursing home care, and assisted-living care services. The Medicaid program will work with stakeholders to devise an appropriations reduction strategy that protects critical services like long-term care.
The so-called cuts in funding to the Behavioral Health aid budget will not mean providers will receive across-the-board rate reductions. Nebraska is split into six “regions.” These are local units of government that the state partners work with to do planning and service implementation. The amount of funding included in the line-item veto represents just 1% of total contract funds allocated to the Behavioral Health Regions. Historically, behavioral health providers under contract with the Regions have received a 10% increase in rates over the last four years. Those rate increases are sustained in the current budget plan.
The line-item veto of funding in the Children & Family Services budget will not mean providers or contractors will receive across-the-board rate reductions. Children & Family Services has identified efficiencies and expects to save $1 million a year with a new statewide contract for drug testing of parents involved with the child welfare system. Those savings more than take care of the $640,000 annual cut in child welfare services.
Sustaining these cuts was difficult, particularly in the light of the efforts to unnecessarily shame those Senators who were supporting the fiscally responsible vetoes of the Governor. After my discussions with Health and Human Services, I felt confident that they can find cost savings to offset these cuts and still provide quality services during these challenging times.