Compared to many states and the federal government, Nebraska has relatively few laws regarding conflicts of interest, reporting of interactions between elected officials and lobbyists, and rules regulating the influence of special interest on lawmakers. Nebraska voters have the expectation that their interests are being represented by their elected officials, not those of paid special interests and lobbyists. Statutes and rules that reflect that intention are conspicuously absent.
In keeping with my firm belief that the lawmaking process in Nebraska should be transparent, responsive, and devoid of undue influence by special interest groups, I introduced LBs 153, 663, 664, and 665. These four bills will provide greater public access and information about lobbying activity, as well as place restrictions upon certain lobbying activities. All four will be heard this week before the Government, Military, and Veterans Affairs Committee.
LB 153, frequently referred to as a “revolving door” bill, would prohibit elected officials from immediately taking a job as a paid lobbyist after leaving office, thereby leveraging their influence as a public servant for profit. The Governor, Lieutenant Governor, Attorney General, State Treasurer, Secretary of State, Auditor of Public Accounts, and members of the Legislature, Public Service Commission, State Board of Education, and Board of Regents of the University of Nebraska would be required to have a two year “cooling off period” before being paid to lobby. Their staff would be prohibited for one year. The language mirrors the federal statute passed in 2007, and 33 states have similar prohibitions on lobbying.
Voters are often unaware of the amount of their tax dollars used to pay for lobbying activities. LB 663 would require lobbyists being paid with public funds–taxes, fees, or grants–to file the entire contract for public evaluation. Furthermore, LB 664 would prohibit political subdivisions from using tax revenue to employ a lobbyist. Use of taxpayer dollars for lobbying is not a new development, but it is one that obscures the policy process. Many political subdivisions, including cities, schools, natural resource districts, and community colleges will use taxpayer dollars to hire private lobbyists.
In many cases, public funds are used for membership dues for organizations who employ full time staff to lobby on their behalf. While associations may also provide other membership benefits, their lobbying efforts to keep dollars flowing to their member governments are their top priority. Assessing the total cost to taxpayers of these lobbying efforts is a challenge. These two bills would facilitate transparency in the use your tax dollars.
Finally, LB 665 would increase the ability of the public to see which interests are lobbying on a bill. Within 24 hours of contacting a member of either the legislative or executive branch about a specific bill, the lobbyist would have to report the bill number as well as the client represented. Voters could immediately identify which special interests are actively influencing a specific bill in real time.
As a senator it is not always obvious to me which special interests are lobbying on a specific piece of legislation or even whom they are representing. For the public–voters and taxpayers–the ability to clearly see which special interests are influencing state policy is even more obscure. Providing greater transparency with regard to lobbying improves the integrity of the legislative process and improves public confidence.
The 105th Legislature has reached the halfway mark of the 90 day session. As committees enter into the final weeks of public hearings, they may advance legislation to General File to for consideration by the entire legislature. A handful of bills have already been passed to further rounds of debate. Most notably, a revised budget for the current fiscal year has already been developed and passed, an unprecedented accomplishment in the Nebraska Unicameral.
Senators and standing committees have selected and identified their Priority Bills. For the remainder of the session, bills with a priority designation will move to the top of the agenda for floor debate. Those bills without an attached priority will not likely be debated this year, but will remain active on General File until the 2018 session. Each senator can select a single priority, each standing committee two, and Speaker Jim Scheer can select up to 25 bills for designation as a speaker priority. Thus, approximately 100 bills of the 667 originally introduced will receive a priority designation. You can access the listing of priority bills from the home page of the Nebraska Legislature’s website, www.nebraskalegislature.gov .
Among the priority bills are a number of issues that have been debated in recent years, including medical marijuana, an application for an Article V Convention of the States, designation of LGBT individuals as a protected class, repeal of Nebraska’s helmet law, and voter identification. In addition, several new and important topics have been prioritized. Bills guaranteeing our K-3 students are competent in reading before being advanced, providing clarity for teachers enforcing classroom discipline, and examining growth of education spending received priority designations.
I prioritized LB 661, the Shield Law bill I introduced in response to the overwhelming message sent by Nebraska voters to retain the death penalty. LB 661 is a step toward ensuring the state can carry out its statutory responsibility. If passed, LB 661 would protect the identity of manufacturers of anesthetic drugs used in lethal injection from harassment. It is also an important step in protecting a domestic supply of anesthetic drugs for medical use, which has been eliminated by the harassment and activism of death penalty opponents.
I selected LB 661 as my priority bill based on my belief that the Nebraska Legislature should be responsive to the voters of Nebraska. To not actively move toward overcoming the obstacles activists and legislative inaction have created is in blatant disregard of the will of Nebraskans. Additionally, the elimination of affordable, safe anesthetic drugs from the market presents an important social justice issue that must be addressed. The Government, Military, and Veterans Affairs Committee, chaired by Senator John Murante, has yet to advance LB 661. My hope is that they will do so soon.
Much interest surrounds the consideration of tax reform legislation. Although two bills were prioritized by the Revenue Committee and several bills heard by the Revenue Committee were prioritized, few bills have been advanced to General File by the committee. At this point in the session, members of the Legislature outside of the Revenue Committee do not have any clear picture of what kind of tax reform measures may be brought to the floor. Work by the entire Legislature will begin once language has been made public.
It is important for constituents to recognize that bills may be changed significantly by committees from their introduced language. Committee amendments may completely replace the original bill when advanced to the floor. When you search a bill on the Legislature’s website, look toward the right hand side of the screen for “Pending Amendments”. There you can read the text of any committee amendments that have been placed on file when the bill was advanced. That will provide the most current language being considered.
The Nebraska Economic Forecasting Advisory Board met on Monday, February 27 to update the projections for General Fund revenue for the remainder of this fiscal year and into the next two years. Known as the NEFAB, the forecast made by this group determines amount the Appropriations Committee uses when developing the biennial budget and the dollars appropriated by the Legislature for state government spending. Based on revenues that have lagged below projections made when the NEFAB met last in October and using ongoing economic modelling, the board decreased its revenue projection for the current year and next two years of the biennium.
It is critical to recognize that although the revenue forecast was decreased, state revenues are still expected to increase under current tax law. According to the NEFAB projections, the state of Nebraska will collect $420 million more in sales and income tax revenue in fiscal year 2018-2019 than this year. That represents an increase in sales and income taxes collected by 9.7% compared to the revised revenue amount of $4,315,000,000 for the current fiscal year.
Most of the coverage and discussion about state spending has focussed upon cuts and reductions in spending on certain programs. The term “revenue shortfall” reflects the difference between the growth in state revenue previously predicted to occur and current growth. Taxes collected continue to increase, as does state spending, despite reductions in the revenue projections made by the NEFAB.
The dollars of the projected decrease in revenue are large, but not that dramatic when put in the perspective of the overall General Fund collections that are over $4.3 billion. The $91 million decrease in the current fiscal year is 2.1% of the total sales and income taxes projected to be collected. Of the $13.5 billion in General Fund revenue that will be collected in the next three years, the revenue reduced in the forecast constitutes 1.2% of the total.
In addition to the Constitutional requirement for a balanced budget, Nebraska statute requires a minimum reserve of 3% of the General Fund be maintained for cash flow and emergency use purposes. That amount is approximately $129 million. The balance between revenue, expenses, and the required minimum reserve is reflected in the General Fund Financial Status. The website of the Nebraska Legislature provides a link for taxpayers to see and examine the most current available numbers on the Financial Status at any time.
State spending is not based upon a zero-base budget that prioritizes programs and spending needs. Rather, the budget is based upon the previous year’s appropriations and presumes to spend all revenue collected by the state. Dollars appropriated to a budget but not spent are not automatically removed from an agency’s budget, nor is the next year’s budget reduced to reflect those unspent funds as a matter of routine practice. Agencies expect to receive the same amount of dollars appropriated the previous year, along with automatic increases for salary and benefit increases of employees, even if they did not spend all of the previous year’s funds.
The decreased Revenue Forecast complicates spending decisions by the Legislature. However, is also presents a valuable reminder about the variability of sales and income tax collections. These are dollars directly from the pockets of Nebraska families and businesses. They reflect the spending and fiscal status of taxpayers. They should not be taken for granted, nor treated as property of the state or state agencies. As the financial conditions of Nebraska families change, so must the spending of the state.
There are multiple steps in the Appropriations Committee budgeting process. First, agencies submitted budget requests through the budget office last fall. Next, Governor Ricketts introduced his recommended budget when he addressed the Legislature in his State of the State address. Then, the Appropriations Committee worked with legislative fiscal analysts to comb through agency requests and developed a preliminary budget. This past week we began the next step of the process, which is four weeks of public hearings where we will hear from state agencies, stakeholders, and citizens about proposed funding. This is my third year on the Appropriations Committee, and I believe the public hearing process is critical to advancing a sound budget.
With growth in state revenue slower than projected, there are two approaches to how we address the slowdown. One approach, which I oppose, is to raise taxes. The other, which I support, is to reduce state expenditures.
The total increase in union-negotiated salaries and healthcare benefits for state employees, coupled with inflationary costs, are greater than the projected increase in state revenues. Therefore, state agencies have adjusted their budgets downward to meet Nebraska’s constitutional requirement for a balanced budget. Another complicating factor is that certain priorities and responsibilities like K-12 education, Medicaid, and the Department of Corrections need additional investments, requiring modifications in other areas to balance the budget.
Much of the discussion has focused on “cuts” to the budget. However, the proposed preliminary budget increases state spending by $95 million in the next year, and then adds an additional $81 million of state spending the following year. That means growth in total state General Fund spending of $176 million in the next two year budget. Some government programs have still had to identity reductions in spending so we can realign priorities. Even though you likely read about spending cuts, state government spending continues to grow, just at a slower rate than previous years.
I approach the situation with the same common sense we use in our household budgets. If increases in our family health insurance costs are greater than the increase in our family incomes, we reduce our discretionary spending to balance our checkbooks. We cut back on entertainment and vacations, covering our mortgage and groceries bills first.
While the final decision about how to appropriate taxpayer dollars rests with the Unicameral, state agencies are given the opportunity to set priorities for their own budgets. When developing their biennial budget proposals, agencies are asked to list “modifications,” or decreases, of eight percent of their budget. These modifications are the spending items the agency offers for consideration as items for reduction, based on their own internal prioritization of their programs and mission. It is from this list and with information provided by the agencies that the Appropriations Committee makes spending decisions.
While this is a difficult process, I applaud many state agencies that took a comprehensive look at expenditures, improved efficiency, and and strategically identified areas for reductions. By reducing duplication of operations, eliminating positions that have been unfilled for extended periods of time, and negotiating contracted services many agencies reduced their spending and maintained services. In several cases, service delivery has been streamlined for taxpayers.
Lawmakers and taxpayers have favorite projects and programs. Individual stakeholder groups and programs have areas of the budget they protect. Likewise, it is important for senators and citizens alike to remember our obligation to prioritize interests for the entire state. This process will help us critically evaluate and prioritize spending as we balance needed services with our obligations to taxpayers.
Only a fraction of the 667 bills introduced during the first ten days of this legislative session will be passed into law. The limited time of the legislative session, 90 legislative days in odd numbered years and 60 legislative days in even years, requires prioritization of bills. This compels senators to focus attention and energy on issues of greatest significance to the state.
The core principle of the Nebraska Unicameral system is that it is open and accessible to all Nebraskans. Often there is a “rest of the story” associated with a particular bill. By understanding the context around introduction and the process, citizens are able to better evaluate bills.
Bills are introduced for a variety of reasons. “Cleanup bills” organize sections of statute that have been amended several times, harmonize terms used in different statutes to refer to the same things, or otherwise edit statutes to make them consistent without making significant policy changes. Although not an official designation, these are routine bills often introduced by standing committees or committee chairs to address sections of law under their jurisdiction.
Rules exist that limit a bill to a specific topic and region of statute. It has become practice in some committees that a bill which addresses a number of different issues within a broad section of statute, unofficially referred to as an “omnibus bill”, can receive a committee priority and be advanced. It is also not uncommon for several bills or parts of several bills addressing similar topics to be combined by a committee following public hearings into a single committee amendment and advanced as an “omnibus bill” for floor debate.
Toward the end of a legislative session, bills that are unlikely to be heard because of time constraints may be amended into bills that are already being debated on the floor, not unlike ornaments hung on a Christmas tree. In order to be attached to the bill, the issue must be germane, or relevant to the topic and area of statute of the original bill. The “germaneness” of any amendment can be challenged and voted on by the Legislature as a whole. These so-called “Christmas tree bills” can be quite controversial. Attaching an unpopular bill to a bill that has successfully advanced on the floor can kill the entire bill.
Not all bills are expected to be advanced to the floor or passed into law. Because every bill receives a public hearing, introducing a bill on a specific topic can be an excellent way to raise public awareness about an issue, identify stakeholders who may support or oppose an issue, or set a process in motion that will lead to future legislation. Most major concepts or new ideas develop over several years.
To illustrate, last year I introduced a bill to address privacy concerns with images captured by drones. It was the first step in what will be a multi-year process as federal regulation of drones by the FAA develops, as does the technology. This year I re-introduced a bill from last year to prevent the revolving door of elected officials and capitol staff moving from taxpayer funded positions directly into lobbying, and various senators have attempted to address this issue over the years. As new senators and staff enter the Legislature, it is important to me that this important ethical issue remains at the forefront of discussion.
Debate over effective tax policy will exist as long as taxes are collected. Obscuring the current discussion of reasonable tax policy proposals introduced in the Nebraska Legislature are euphemisms, rhetoric, and catch phrases that oversimplify the ramifications of proposed tax changes. Terms like “expanding the tax base”, “revenue neutral”, and “three-legged stool” sound reasonable and pragmatic. Unfortunately, they are commonly used to misrepresent a dynamic shift in the sources of tax revenue that can significantly change the tax bill your family pays.
Taxes collected by the state have fallen short of projections made by the Nebraska Economic Forecasting Advisory Board during the last year. This has prompted discussion about “expanding the tax base”, which means assessing sales tax on items currently exempt from sales tax. Food, professional services, and business inputs are just a few of the many items currently exempt from sales tax. Put simply, you will pay more sales tax than you currently do of these items are subject to the state rate of 5.5% in addition to local rates.
According to the Tax Foundation, the average Nebraska family of four currently pays $4300 in sales tax annually, the 19th highest per person rate in the nation. Because they are incremental costs at the time of purchase, most taxpayers don’t recognize the total impact of sales taxes on their budget. One current proposal would increase the state sales tax to 6.5%, which would mean an addition $754 each year for the average family.
Advocates of current sales tax increases in Nebraska pair their tax hike with the concept of “revenue neutrality”. This political spin assumes that while your family will pay more in sales taxes, that increase in state revenue will cause a dollar-for-dollar decrease in the amount of other taxes you pay. Current proposals in the Legislature direct those dollars to a property tax credit fund to create a direct rebate to property taxes. That assumption does not reflect reality.
While the state collects and appropriates sales tax revenue, the Legislature does not set property tax levy rates or spend property tax dollars. Only local governments and individual political subdivision boards set, collect, and spend property tax dollars. The current proposal does not provide more money to local governments that set property tax rates and spend property taxes. There is no requirement that they limit their budget growth, spending, or levy increases. Past experience with the Property Tax Credit Fund and directing additional state revenue to local political subdivision demonstrates that you will pay more in sales taxes and your property tax bills will continue to rise.
Raising sales tax rates, adding sales tax to additional goods and services, and attempting to shift state general fund dollars to obfuscate local government spending are sold to taxpayers under the guise of rebalancing a purported “three legged stool” that is held as a standard for tax policy. The term “three legged stool” has its roots in marketing campaigns for financial planning services, not tax policy. A study of Nebraska’s tax history shows many changes and alterations, but an equal balance of sales, income, and property tax revenues has never existed.
Furthermore, that distribution of revenues is not a standard applied in other states. Nine states don’t even have a personal income tax, including Nebraska’s neighbors Wyoming and South Dakota. Property tax bases and funds are applied differently in each state.
The past fiscal year has demonstrated how variable state revenue from income and sales taxes can be. Programs funded by state revenues must be able to adapt and respond to the inherent swings that accompany economic cycles. While the “three-legged stool” concept is intended to provide a visual image of stability, it fails to reflect the dynamic nature of tax revenue and government spending.
There were 667 individual bills introduced in the first ten days of the legislative session. After being officially recorded by the Clerk of the Legislature and entered into the record, the Referencing Committee assigns each bill to one of the 14 standing committees. The legislative process in Nebraska will then begin with the public hearing required of every bill by the committee to which it was referred.
Some bills are very basic, making only language changes or modernizing terminology. Others are simply appropriations bills, which allocate a certain dollar amount to a specific program in the state budget. On the opposite end of the spectrum are large, comprehensive bills that address many areas of statute and make broad changes to existing state law. Some of these bills can be 25 or more pages in length.
Each of these bills will receive a hearing that is open to the public to provide testimony and insight. The committee process is also the first opportunity for members of the committee to which the bills was referred to provide input to the bill language. Legal counsel for the committee also has expertise in areas of statute typically addressed by the committee, often recommending language changes to harmonize the bill with existing statutes. In order for a bill to move on to General File, the first of three rounds of voting and debate by the entire Legislature, it must first successfully pass out of committee. Committee amendments to the original introduced language are made more often than not.
Very few, if any, of the bills passed by the Nebraska Legislature are exactly the same as introduced. In many cases, most of them will be substantially changed as the bill makes it through the process and input from the public and other senators refines the language and compromises are reached. Moreover, of the over 600 bills introduced, it is likely only around 100 will actually be debated on General File by the entire Legislature. Every senator can designate one bill as a Priority Bill, while each committee chair can designate two. The Speaker can assign a priority to up to 25 bills. Due to constitutional limitations on the length of a legislative session, bills without a priority designation are much less likely to make it on the schedule for floor debate.
It has been great to hear from many constituents over the past few weeks about specific bills. Our system works best when citizens engage and make their voices heard. However, I have also received calls and emails from voters who have been mislead about what a bill actually says or the intent of a specific bill. I have noticed that a false or misleading post on social media making allegations about a bill can spread very quickly. Special interest groups who oppose a specific bill are paid to create opposition, and will often oversimplify or present extreme consequences to spin up the public.
Bills are introduced for a variety of reasons. Some are introduced simply to foster discussion or to get a first pass at the public opinion on an issue. Because bills can only be introduced during the first 10 days of the legislative session, others are placeholders that impact a particular area of statute and provide options for senators to address issues that develop. Still others are shell bills, such as the budget bills, which will be completely replaced with new language when the budget has been developed or specific costs are known. Don’t assume that a bill as introduced is ever even intended to be passed into law as introduced.
A well informed public is essential to a functional democracy. While social media can be a great tool to disseminate information, all of the bills are longer than the 140 characters of a tweet. Social media or blog posts cannot adequately explain all aspects bill, often leaving out critical details. While I disagree at times with legislation introduced by fellow senators, no senator seriously introduces a bill with malevolent intent or desire to destroy an industry, kill people’s dreams, or start a war with any group. Each bill introduced, in its own way, represents an idea a senator has to improve life in Nebraska. While it may be an approach some disagree with or have consequences not fully realized at the time of introduction, it does not mean the senator had bad intentions.
To truly understand an issue, read the bill. The full text and any amendments of every bill introduced is available at www.nebraskalegislature.gov . You can also track where the bill is in the process, find hearing dates, read the introducing senator’s statement of intent, see the fiscal costs, and read committee statements as well. I encourage everyone to utilize these resources. My office is also happy to help voters get the correct information they need to make decisions about bills before the Nebraska Legislature.
Unemployment Insurance is an important safety net for individuals who become unemployed through no fault of their own. Nebraska employers pay into the Unemployment Insurance Trust Fund through a combined tax rate to fund benefits for up to 26 weeks for individuals who lose their job. Additionally, in Nebraska people who voluntarily quit their job are also eligible to receive up to 13 weeks of benefits. Although the weekly benefit amount is not large, it provides important support to help workers and families through financial challenges when unemployed.
The long term sustainability of safety net systems like Unemployment Insurance can be jeopardized when the system is abused beyond its original purpose. Nebraska allows an individual to reapply for unemployment benefits after voluntarily leaving a job a second time after only one week of work. A person could choose to quit their job, collect 13 weeks of unemployment benefits, go back to work for one week, then voluntarily quit again and collect another 13 weeks of benefits. Abuse of the system in this way costs employers higher contribution rates to the Unemployment Insurance Trust Fund, as well as incentivizes a revolving door practice of some individuals. It also burdens the system for those who truly need unemployment benefits when they lose their job due to circumstances beyond their control.
This past week I presented LB 203 to the Business and Labor Committee to require a “requalification” for unemployment benefits for those who quit their job without a reason. In order to qualify for 13 weeks of benefits a second time, the applicant would have to work long enough to earn four times their weekly benefit amount. To illustrate, an individual who received $300 per week for 13 weeks after quitting their job voluntarily would have to earn at least $1200 in wages before they could receive another 13 weeks of benefits after voluntarily quitting a second time.
Workers who lose their job due to layoff or other causes beyond their control are unaffected. They will be eligible for the full 26 weeks of benefits. Additionally, individuals who quit because of significant changes in their salary, benefits, or working conditions are classified as “good cause quits”, and are also unaffected. Persons who leave a job voluntarily the first time remain fully eligible for 13 weeks of benefits. Only those who leave their job voluntarily two or more times are impacted by the proposed change.
According to the Nebraska Department of Labor 7,912 Nebraskans received unemployment benefits in 2015 after leaving a job voluntarily. Of those, 2,880 received a second round of benefits that averaged $2,575. Annually that amounts to over $7 million. While the second and subsequent round claimants could requalify under LB 203, the Department of Labor estimates the annual savings to Nebraska job creators will approach $5 million with the new requalification requirement.
Nebraska is one of only 3 states that do not require a requalification for benefits after a person voluntarily leaves a job without good cause. In comparison to the four times weekly requirement proposed in LB 203, Iowa requires 10 times the weekly benefit amount, while South Dakota requires 6 and Wyoming requires 8.
Government can and should provide a safety net for individuals who experience hard times or struggle during economic downturns. The sustainability and effectiveness of those programs should be carefully preserved. Taxpayers and businesses should not bear the additional burden for individuals who may abuse the system.
On November 8, 2016 the voters of Nebraska overwhelmingly passed Referendum 426, which preserved the death penalty in the state of Nebraska. LB 268, passed in 2015, eliminated the death penalty and was suspended shortly after when more than 143,000 Nebraskans signed a referendum petition to allow a vote of the people. The second house of the Nebraska Legislature, the people, exercised their rights through the referendum and electoral process. With 92 of 93 counties and 61 percent of all voters voting to preserve the death penalty in Nebraska, the people spoke clearly.
A frequent claim of death penalty opponents is that the system for carrying out the death penalty is broken beyond repair. It is now the responsibility of the elected officials and state agencies to respect the will of the people and fix the functional problems with the death penalty.
One of the most significant impediments to a functional system of capital punishment in Nebraska, and many other states, is the inability to acquire the anesthetic drugs administered to produce unconsciousness during lethal injection. The drugs are unavailable a result of political activism by death penalty opponents and public harassment of companies that manufacture the drug. Due to these shortages, many states have had to turn to specialized compounding pharmacies to formulate individual drug doses. Some states like Nebraska have unsuccessfully attempted to import the anesthetics internationally.
I introduced LB 661, to amend public records statutes to protect the identity of individuals or companies who supply drugs for lethal injection. Known as a “shield law”, the law protects individuals involved in the manufacture of drugs used executions from harassment and threats. The integrity of the drugs and transparency of the execution process is maintained, as the drug and laboratory analysis of the drug is still publicly available. Only the identity of the individual private citizen is confidential. Thirteen states already have existing shield laws in place.
I remain a steadfast advocate of transparency in government, including the votes of public officials. When I am acting as your elected representative, my votes are a function of my elected office. They must be available to you to see. Private citizens, however, have a right to protection from undue harassment and threats for carrying out their duties. Pharmacists and private citizens have not voluntarily pursued public office.
To illustrate the principle, an analogy of the safety of manufactured products can be made. The safety of a lamp you purchase and manufacturing information should be public. However, the actual employee who assembled the parts of your lamp should be free from harassment if you are unhappy with your lamp. Similarly, the identity of the individual who manufactures an anesthetic is immaterial to the process of execution, provided public scrutiny of the drug and its purity are openly available.
LB 661 is written specifically to address only public records statutes. It does not impact the judicial application, sentencing, or court process regarding the death penalty as a punishment. Rather, it simply fixes a procedural issue in public records that contributes to a dysfunctional system.
I understand and respect all views on capital punishment. However, it is my responsibility as state senator to be responsive to the will of Nebraskans, and the citizens in my district, and make government programs they demand work.
2017 marks the beginning of a new biennium in the Nebraska budget process. Every odd-numbered year the Nebraska Legislature develops and adopts a two year budget. Adjustments to the two year budget, called deficit appropriations, happen in the opposite year to address additional budget issues that arise unexpectedly. The state fiscal year runs from July 1 through June 30. Thus, dollars currently being spent were originally appropriated in the 2015 session for expenditure during the 2016-2017 fiscal year, which will end this June.
The budget process begins with the introduction of a budget proposal by the Governor. The Legislature’s Appropriations Committee, made up of 9 members representing each of the three congressional districts, reviews each component of the budget proposal line-by-line. The committee develops a preliminary recommendation, which forms the basis for public hearings held to obtain input from agencies, voters, and taxpayers. Following public hearings, the Appropriations Committee again works through the budget. Adjustments are made based on new information obtained from the public before advancing a final budget proposal to the floor for debate by the full Legislature. Following passage of the budget, the Governor does have the authority to exercise a line-item-veto of any single appropriation.
The amount of money used to develop the General Fund portion of the budget is based on projections of the Nebraska Economic Forecasting Advisory Board. These estimates are certified as a “Revenue Forecast”, based on the anticipated amount of sales tax and income taxes that will be paid in the future. It is important for voters to recognize these are calculations based on a number of economic assumptions, which try to predict your spending habits and income levels 24 months in advance in an attempt to estimate how much tax revenue may come into the state.
Over the past 7 months the actual receipts of tax revenue has been lower than projected. Thus, the assumptions around which the last state budget was developed did not prove to be correct. The “shortfall” represents this disparity between the expected revenue from taxes and the dollars appropriated. The Nebraska Constitution does not allow the state of Nebraska to spend money it does not have. Thus, adjustments must be made to the previously passed budget.
On the 17th and 18th of January the Appropriations Committee will hold public hearings on the proposed changes to the current fiscal year budget in response to the decreased revenue receipts. The budget adjustments include a combination of spending reductions, transfers into the General Fund from other funds including the Cash Reserve, and lapsing of unspent appropriations from last fiscal year.
Before work can begin on the next biennial budget, the current year adjustments must be passed by the Legislature. The typical process for the evaluation and development of the preliminary budget for 2017-2019 will be delayed during the process of revising the existing budget.
The Nebraska Economic Forecasting Advisory Board will meet again in February and April. That board has the ability to make adjustments to the certified revenue forecast based on economic data they have at that time. Those projections will need to be accommodated if they arise. As state revenues remain fluid, the budget writing process will need to be responsive to those conditions as well. Nebraska has a proud tradition of passing a balanced budget consistently on time, an accomplishment not achieved by many states. With diligent work, we will maintain that successful history.
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