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Most of the activity the past two weeks has focused on the budget. The Legislature sent its $8.9 billion, two-year budget package to Gov. Pete Ricketts for approval on May 9.
Using his line item veto power, the governor cut $56.5 million in spending. He also raised the cushion in the cash reserve to 3 percent. The Legislature had proposed lowering it to 2.5 percent.
The bulk of the cuts, $33.6 million, came from programs in Health and Human Services. The governor’s original budget proposal included 3 percent cuts in the rates paid to service providers in four areas: Medicaid, child welfare, behavioral health and developmental disabilities. The Legislature’s budget proposal maintained provider rates at current funding levels.
Most of the remaining budget cuts came from two areas: funding for the University of Nebraska and funding for the judicial branch for probation services, juvenile justice transportation, and costs associated with the specialized court system.
The Legislature took up overriding the governor’s vetoes on May 17. After careful consideration I chose not to vote to override any of the vetoes. It was not an easy decision to make but it was one based solely on my belief that lowering spending is absolutely necessary to keep the state on sound financial footing. Around 4 percent of our current budget is made up by one time cash transfers that we will not be able to do again, at least not anytime soon.
During the Legislature’s initial budget debate several other senators and myself decided that we simply could not support the budget without spending cuts. I wish we had been given other options for cutting the budget but these were the choices presented to us.
I recognize these particular cuts will be unpopular with some. With a $303,768,166 two year budget the veto cuts the HHS budget by $3.2 million per year, around 2.1 percent. I was given assurances by the executive branch and the Department of Health and Human Services that through spending efficiencies and reallocation of funds current services will not be hurt. I have every intention to see that that is the case.
The unpleasant truth is we’ve got to reduce spending. I don’t see a significant increase in our revenue stream on the horizon. Without additional revenue coming in, the only other option is to deplete our cash reserves which would be ill-advised with a great deal of financial uncertainty ahead.
If we don’t do something now to reign in our spending we are going to be in an even worse position before very long. While painful, it will be much easier to make small cuts now which can be absorbed over time rather than reach a point where we have to make larger and more drastic cuts all at once.
There are still a number of senators who are convinced these cuts will not be enough. They believe revenues will continue to fall and we will have to convene a legislative special session later this year and cut even more. It is my hope that what we have done will head that off.
LB496 introduced by Sen. John Stinner of Gering also received much attention last week. The bill would have allowed villages and cities of the first and second class to use tax increment financing (TIF) to finance construction of single-family and multi-family housing as part of a redevelopment project eligible for TIF.
I was strongly opposed to the bill because it would divert property tax revenue from public schools while at the same time increasing the number of students in the district. It would also make it difficult for builders that do not use TIF to compete. I offered an amendment that would allow only the property taxes collected by the locality to be diverted for the construction of a workforce housing project using TIF. In the end the bill failed a cloture motion 32-9 and was not advanced.
The Legislature has now completed its work for the year and will adjourn Sine Die on May 23.
Please feel free to contact me and my staff about your legislative concerns or other issues you would like to discuss. My email address is email@example.com and our telephone number is 402-471-2630.