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Curt Friesen

Sen. Curt Friesen

District 34

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The Appropriations Committee provided the legislative body with recommendations of their $8.6 billion 2-year budget which is made up of 7 bills (LB’s 658, 659, 656, 657, 660, 661, 662, 663, and 663A).

We began the discussion last Thursday on those recommendations, which include utilizing $55.7 million of Cash Reserve Fund monies for four different items: 1) a $17.2 million to cover payment of IV-E disallowance penalties imposed on the Department of Health and Human Services; 2) $5.5 million transfer to the Republican River Compact Litigation Contingency Cash Fund to pay a court-ordered settlement related to the State of Kansas v. State of Nebraska Republican River Compact; 3) $25 million transfer to the Nebraska Capital Construction Fund for construction at the University of Nebraska Medical Center of the Global Center for Advanced Inter-professional Learning; and 4) $8 million to Coordinating Commission to contract with Creighton University to increase the number of graduates of the dental college which provides reduced-fee and charitable oral health services, oral health workforce development, and oral health services using tele-health. This last item has drawn some opposition on first round and may have trouble staying in the budget.

With approximately $720 million in the cash reserve we will follow the concepts used by the Appropriations Committee in the 2014 session which were that a significant balance should be retained in the Cash Reserve Fund and any use of the Cash Reserve Fund should be for one-time items to match the one-time nature of the financing source.

A $60 million increase in the amount of money transferred to the Property Tax Credit Cash Fund was made a priority of the Appropriation Committee. The $60 million per year transfer totals $120 million over the two year biennium which would place $200 million per year into the Property tax relief fund. This would give a credit of around $94 per $100,000 of valuation. Although accounted for as a transfer and not an expenditure, in terms of using available General Funds, this is the single largest increase in the budget. Of particular interest is the distribution of the property tax credit has increased over the years for the agricultural sector. Since the property tax credit is distributed solely based on valuation, the high growth in ag land values and flat valuation in residential has resulted in a shift in the credit distribution to taxpayers. In 2007, when the Property Tax Credit Fund was created, ag land received a distribution of 24.1%, while residential land received a distribution of 55.7%. In the new budget recommendations ag land is estimated at receiving 44.8%, while residential will be receiving 37.9%.

The committee budget includes funding for state aid to schools (TEEOSA) to fully fund the certified aid for 2015/16 and current estimated funding needs for 2016/17 based on the existing TEEOSA formula. TEEOSA school aid is the largest single spending item accounting for a $79.7 million increase over the two years. Even with this increase there will be no school in District 34 that will receive equalization aid and the number of schools statewide that receive equalization funding will decline.

The appropriation for the Department of Correctional Services is one of the largest increases in the budget. In FY15-16 the increase is 11.2% or $20.3 million. Almost half of this amount is related to inmate medical costs. Health care costs have increased significantly during recent years due to an increase in inmate population, an aging inmate population, inflation, and the new Hepatitis C treatment. The committee recommendation also includes $2.5 million each year for 59 additional security staff and $1.2 million each year for behavioral health staff. These funds are critically important in helping to solve the current overcrowding of our prison system by making sure treatment programs are available to inmates that are in need of mental health programs. Hopefully by providing intense probation and aggressive treatment of the mental health issues, such as drug and alcohol addictions, we can keep these people from returning to prison.

And finally, the committee included a general 3% increase to the University of Nebraska, State Colleges, and Community Colleges. Also funded were several specific items for the University of Nebraska including operation and program costs for the Health Science Education Center ($1,424,000 FY16 and $2,424,000 FY17) and support of the Yeutter Institute for International Trade and Finance ($1,250,000 each year). This program could be the push we need to grow our international markets that our agricultural economy will need to keep us the number one industry in this state.

Budget growth in the proposed budget is 3.8% in FY16 and 2.4% in FY17 for a two-year average of 3.1%. This two year average is virtually the same as the Governors recommendation, and would be the third lowest growth in the last 30 years.

If this budget is approved, $48.9 million will be available for other proposals still under consideration by individual senators. By the end of the day at 8 p.m. we advanced the budget recommendations to the second round of consideration.

The Nebraska Economic Forecasting Advisory Board met on Thursday, as we began debate of the budget bills, with good news to report. They did not have to lower the revenue forecast for the 2015-17 fiscal years as some had been concerned about. In fact, they raised the money that could be available by nearly $10 million. And if current year revenues grow as expected, the state would have $12 million more to deposit into the Cash Reserve Fund. Hopefully the body will not look at these dollars as additional spending opportunities.


Sen. Curt Friesen

District 34
Room 1110
P.O. Box 94604
Lincoln, NE 68509
(402) 471-2630
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