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If you would like to review the FY2018-19 Appropriations Committee Budget Proposal it can be found at: https://nebraskalegislature.gov/pdf/reports/fiscal/2018proposal.pdf
Last week the legislature turned its attention to the budget. First round budget debate took place on Tuesday. It was a long day to say the least. We convened at 9:00 a.m. and adjourned at about 11:30 p.m., taking only a couple of short breaks for meals. With time running out we are likely to have more late nights in the next few weeks.
Nebraska’s budget process follows a two-year cycle. A comprehensive biennial budget is adopted by the legislature in odd-numbered years. In even-numbered years, like this one, adjustments are made as necessary.
Last year when the $8.8 billion FY2017-18/FY2018-19 budget was passed revenue receipts were falling short of expectations, future projections were uncertain and the state was facing a serious budget shortfall. Many state agencies saw sizeable budget decreases amounting to a reduction of 2 percent in their general fund appropriations for FY2017-18. A reduction of 4 percent was scheduled for FY2018-19.
This year, while not rosy, revenue has ticked up slightly. The forecasting board met in February and revenue has been coming in slightly above projections. Revenue growth is now projected at 3.8 percent for FY2017-18 and 4.9 percent for FY2018-19. The average growth for the prior three years was 2.3 percent.
The mid-biennium budget adjustment being proposed by the Appropriations Committee would keep the 2 percent reductions for FY2017-18 but lower the reduction for FY2018-19 from 4 percent to 2 percent except for the University of Nebraska, state and community colleges. They would see a 1 percent reduction. Reductions in state aid to individuals and local governments will remain at 4 percent.
Additional monies will be directed to DHHS due to increased Child Welfare aid costs incurred from serving more children and the children being served requiring more services. In addition, the federal Medicaid match rate will be lower than originally budgeted requiring the state match rate to increase.
A budget savings of $25.4 million will be realized from lower than expected TEEOSA costs. Even though total spending is reduced, the amount of aid received by school districts will still be equal to the amount required under existing law. This figure is based on calculations by the Department of Education
Even with all the spending cuts and unexpected savings, total overall spending will still be slightly higher. The budget adopted last year limited spending to a two year average increase of 0.6 percent. This year’s proposal would result in 0.5 percent average growth in spending over the next two fiscal years.
An item that continues to concern me is the transfer of money from the Cash Reserve Fund (rainy-day fund) to the General Fund. The Cash Reserve Fund was established in the 1980s to set aside money that could be used to plug holes in the state’s budget in the event there was insufficient money in the General Fund to meet expenses. In years when revenue receipts exceed projections the excess monies go into the Cash Reserve Fund.
The proposal this year would transfer $100 million from the rainy-day fund to the General Fund, leaving the balance at about $296.4 million. This is approximately 2.5 percent over the amount that is required by law. Last year almost $340.8 million was transferred out of the Cash Reserve Fund.
Since FY2015-16 the cash reserve has been reduced by 59.4 percent. Clearly this is not sustainable and we have put ourselves in a precarious position for the future.
Another concern I have is the continued, and unanticipated, sweeping of money out of cash funds accumulated by various agencies, boards and programs. The funds are then redirected from their intended purposes to propping up the General Fund.
Under last year’s budget, $93.4 million was to be taken out of 47 cash funds over the biennium. This year, $14.7 million from an additional 19 cash funds is slated to be transferred into the General Fund.
As is almost always the case, the budget discussion got a little heated at times but ultimately all four of the budget bills were advanced to select file.
If you would like to review the Appropriations Committee’s full budget proposal, this link will take you to that web page: https://nebraskalegislature.gov/pdf/reports/fiscal/2018proposal.pdf.
Finally, if you have any questions about the proposed budget or other legislative concerns you would like to discuss, please feel free to contact me or my legislative staff. My email address is firstname.lastname@example.org and our telephone number is 402-471-2630. You are always welcome to stop by my office in the State Capitol.
Things in the Legislature continue to be busy with floor debate in the morning and committee hearings in the afternoon.
Short sessions are always more hectic because there is still much to do but fewer days in which to do it. This year it seems even more so. With big challenges still ahead, most notably the budget shortfall and the urgency to do something about property taxes, the time to address other important issues will be limited.
Last week several days of debate were devoted to a bill introduced by Sen. Dan Hughes of Venango. LB758 was intended to reduce the negative impact on the local property tax base suffered by counties when natural resources districts and interlocal entities buy private land to use for projects augmenting streamflow as required by the 2003 Republican River Compact. The Compact apportions surface water usage between Colorado, Kansas and Nebraska.
The Rock Creek Augmentation Project and the Nebraska Cooperative Republican Platte Enhancement project (N-CORPE) are at the center of the debate. Between the two, almost 25,000 acres of irrigated land was purchased in Lincoln and Dundy counties and converted to grassland in order to pump groundwater into the Republican and Platte rivers to meet the compact’s requirements. The lower tax valuation that resulted from the conversion had a significant adverse impact on these counties.
As introduced, Hughes’ bill required that Rock Creek and N-CORPE work with the county in which the project is located to reduce the impact to the tax rolls. While they have paid assessed property taxes in the past, they have challenged the requirement on the premise that a public entity should not have to pay property taxes on land that serves a public purpose.
In July 2017 the state Tax Equalization and Review Commission (TERC) agreed. In light of this ruling, an amendment to the bill is pending that would allow NRDs and interlocal entities to make voluntary payments to a county in lieu of taxes.
Overall I am not a fan of these projects but they have helped the state meet its obligations under the compact. I do support the pending amendment which will hold school districts and other local entities harmless as was originally intended. I hope that at some point in the future the projects will be terminated.
The ultimate future of the bill is uncertain. Several Senators are strongly opposed to it and there may not be enough support in the body to overcome a potential filibuster.
Looking ahead, the Transportation & Telecommunications Committee, which I chair, will soon be holding hearings on several bills which are generating a great deal of interest.
LB856 introduced by Sen. Adam Morfeld of Lincoln seeks to institute an internet neutrality provision at the state level. Net neutrality requires that internet service providers treat online data equally and do not favor certain content or users; and, that there are no limitations or restrictions on internet access based on content or user.
LB1063 introduced by Sen. Mike McDonnell of Omaha creates a fund to assist victims of traumatic brain injury funded through fees on vehicle operator’s licenses and permits along with state issued identification cards.
LB1009 introduced by Sen. John Murante of Gretna raises the speed limit on some types of state roads and creates a new road classification. The new “super-two” will be a two-lane highway with intermittent passing lanes, primarily intended for through traffic.
Nebraska currently has 9 road classifications: interstate; expressway; major arterial; scenic-recreation; other arterial; collector; local; minimum maintenance; and remote residential.
Finally, as always, 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. If you are in Lincoln, you are always welcome to stop by the office and visit with me. My office is in room 1110 in the Nebraska State Capitol.
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