Education is the foundation of a productive civilization. Education equalizes social disparities, expands options, and stabilizes communities. The Nebraska Constitution reinforces the value our state places on education, stating in Article VII, “the Legislature shall provide for the free instruction in the common schools of the state all persons between the ages of five and twenty-one years.” Proficiency in basic skills, including reading and math, is the primary function of public education.
Parents, students, and employers assume that advancing from one grade to the next means a student has mastered the material in that grade. It is also presumed to indicate the student is prepared to begin learning the more advanced material in the next grade level. Unfortunately, that is not the case for many children in Nebraska. The 2015 National Assessment of Educational Progress reports only 39% of Nebraska fourth graders are proficient in reading. By 8th grade, that proficiency falls to 38%. This statistic should outrage parents and concerned citizens. Put simply, students are being advanced through school without mastering basic reading. This proficiency gap is the impetus behind LB 651, a bill that requires schools to ensure reading proficiency in the early elementary years and create an action plan to develop proficiency in students who are behind.
If unable to read at grade level, students cannot continue their educational growth and progress in math, science, social studies, or vocational education. Advancing children to higher grades, expecting more complex work without mastering reading, sets students up for failure. The fact that the proportion of students not proficient in reading remains static between 4th and 8th grade demonstrates that the deficiency is not addressed between elementary and the end of junior high.
According to the Annie E. Casey Foundation, nearly 90% of the students who fail to graduate from high school struggled to read in the third grade. Two-thirds of students who cannot read proficiently by the end of the fourth grade will end up in jail or on welfare assistance.
Not developing reading proficiency early has lifelong consequences for Nebraska children. As children fall further and further behind in school, their options for higher education and career success decrease dramatically. Over 60% of community college students require remedial education, paying hard earned dollars to obtain skills they did not master in high school. Nebraska’s ACT scores demonstrate most high school graduates are not prepared for success in college level reading, math, and science.
Six in ten Nebraska children in 4th and 8th grade are not proficient readers under the current system. This is unacceptable. The challenges faced by teachers helping students learn to read are very real. However, not confronting the problem of poor literacy among Nebraska children is not an option. Teaching children to read is the fundamental function of Nebraska schools.
The opposition of the education establishment to defining clear expectations that every 3rd grader in Nebraska should be able to read at grade level before moving to the next grade is disheartening. LB 651 has been the target of a significant misinformation campaign by the education lobbyists and the teacher’s union. Criticism has focussed on the effects of holding a child back on their self esteem, ignoring the fact the bill outlines a stepwise progression to ensure children receive intervention and individualized strategies every year of their early elementary years.
Repeating a grade is a last resort, only after significant intervention has failed. LB 651 anticipates special circumstances and outlines specific criteria for students with special needs, including learning disabilities, English as a second language learners, and other individual needs. Formal cooperation and communication between parents, the student, and teachers are integral components of the proposal.
Nebraska children need an education that helps them succeed, and it begins with elementary reading proficiency. Nebraska taxpayers have a right to expect schools to establish and maintain basic reading standards in exchange for the $11,000 and more they invest in the education of every student annually. All Nebraska students deserve to be equipped with the basic reading ability to enable them to be independent citizens.
Collecting taxes and spending those dollars is a fundamental function of state government. Over the next several weeks the Nebraska Legislature will debate both issues in depth with the advancement of the biennial budget to the floor by the Appropriations Committee and the advancement of the Nebraska Taxpayer Reform Act by the Revenue Committee. Both are large, significant pieces of legislation that will impact Nebraskans for years to come.
The 2017-2019 Budget advanced to the full Legislature by the Appropriations Committee recommends a 1.1% increase in General Fund state spending over the next two years. This represents a slowdown in the growth of state government spending from prior years, reflecting the decreased state revenue from sales and income taxes. Economic stress in the agricultural economy, Nebraska’s top industry, is the reason revenues have lagged below projections.
As a member of the Appropriations Committee, I did not vote in support of the advancement of three bills that compromise the seven bills of the “budget package”. In order to balance the budget, over $200 million was swept from Cash Funds and transferred to the General Fund. Additionally, $173 million was transferred from the Cash Reserve, known as the “rainy day fund”. In total, 4.2% of the next General Fund biennial budget as proposed will be funded by one-time money from these cash transfers.
I fundamentally disagree with the extent to which one time cash transfers are proposed for use in this budget to fund ongoing state expenses. It creates a structural imbalance that does not represent a balance between tax dollars coming into the state treasury and spending. The Cash Reserve is a backstop, and should the profits in agriculture not grow significantly in the next two years, we will have to drain those reserves or have drastic cuts in state programs. The state will need to generate half a billion dollars in new tax dollars in the next biennium just to fill the hole created by funding ongoing appropriations with one-time money.
Tax receipts are coming in below projections for a basic reason: Nebraska families are not making and spending as much money as projected. Tapping deeper into family budgets that are already stretched tight to collect additional sales or income taxes does not solve the problem. It simply puts more financial strain on taxpayers, both families and businesses.
Setting spending priorities and making difficult decisions about state programs is not an easy task. Powerful special interests spend millions of dollars annually lobbying senators to insure their state funds keep flowing. Sound bites and political taglines replace thoughtful debate. Nevertheless, kicking the can down the road is not a responsible action.
As debate begins on the budget bills, my focus will be on both the immediate and long term implications of the spending decisions for Nebraska taxpayers. Structure balance to the budget, both now and in the future, is my top priority.
My personal priority bill, LB 661, will soon be debated by the full Legislature on General File. Known as a “shield law”, LB 661 creates a new section in public records law protecting individuals involved in the manufacturing of drugs used in lethal injections from harassment and threats. The integrity of the drugs and transparency of the execution process is maintained, as the identity of the drug and the laboratory analysis of the drug are still publicly available. Only the name of the individual is confidential.
One of the most significant impediments to a functional system of capital punishment in Nebraska is the inability to acquire the anesthetic drugs administered to produce unconsciousness during lethal injection. The drugs are not commercially available as a result of political activism by death penalty opponents and public harassment of companies and individuals that manufacture the drug. Due to these shortages, many states have had to turn to specialized compounding pharmacies to formulate individual drug doses. In several cases those compounding pharmacies have ceased production due to harassment.
There is a significant and direct human cost of activist harassment against those who produce drugs that may be used in lethal injection. Death penalty opponents have successfully eliminated sodium thiopental, an anesthetic induction agent routinely used in lethal injection, from the U.S. market in order to protect the lives of convicted death row inmates. Global availability has also been dramatically reduced, notably in developing regions of the world where it is the best option for safe anesthesia.
Sodium thiopental is a safe, effective, and FDA approved anesthetic agent, considered a mainstay of modern anesthesia. I cannot overstate the absurdity or the magnitude of the social injustice of an anesthetic shortage created by those who wish to protect convicted death row inmates in exchange for vulnerable lives around the world who are in need of safe medical care.
Sodium thiopental is just the beginning. As states implement alternative protocols using different drugs, harassment may lead to shortages of midazolam, propofol, and other safe, approved, and effective anesthetic and sedative drugs. Missouri has already withdrawn its plan to use propofol under public pressure that it would be removed from the sale in the United States. Plainly stated, needed and appropriate medical anesthetics are not available due to harassment of manufacturers.
Of the 31 states that currently have lethal injection as a method of execution, 15 have a “shield law” to protect individuals involved in the manufacture of drugs used executions from harassment and threats. The United States Supreme Court has said that since execution by lethal injection is legal, states must be allowed some manner to carry it out an execution. Disclosing the identity of suppliers subjects them to a risk of harm, violence and harassment and would prevent the State from obtaining lethal chemicals needed to perform our State obligations.
I remain a steadfast advocate of transparency in government, especially the votes of public officials. Private citizens, however, have a right to protection from undue harassment and threats for carrying out their jobs as private citizens. Pharmacists and other private citizens involved in the process have not voluntarily pursued public office.
Additionally, Nebraska state law has identified a number of privacy provisions in public records law to protect private citizens and companies in their interactions with state government. These include constituents who correspond with my legislative office, companies that receive tax incentives, companies that receive state dollars through Nebraska Innovation campus affiliated with the University of Nebraska, and trade or proprietary information. If we aggregate company data to protect the identity of companies receiving tax breaks and financial incentives, it is reasonable to protect the identity of private professionals doing their jobs.
In consideration of LB 661, there exists one fundamental issue: the compelling interest to know the identity of the individual who supplies the drug provided in lethal injection. If all other information, including the drug, its composition, and its analysis can be provided to the defense and to the public to provide oversight and scrutiny of the integrity of the compound and the process, what value is the name? That identity provides no material value to the defense or the public, and certainly does not justify the harassment and retaliation of a private citizen.
Health care and medical spending are a significant portion of the total U.S. economy. According to National Health Expenditure data, spending related to health care amounts to approximately $9,900 per person annually. Representing almost 18% of the entire national economy, the healthcare sector and policy that impacts spending on health care has a significant effect on your family finances and government budgets.
This session two of my bills relating to health care have been unanimously advanced to General File by the Health and Human Services Committee. Both are issues I have worked on over the course of the past two years. LB 223 further defines aspects of Nebraska’s Prescription Drug Monitoring Program and was prioritized by Senator Sara Howard of Omaha as her personal priority. LB 481 creates a state framework for the prescription and use of biosimilar and follow on biologic pharmaceuticals within Nebraska. Speaker Jim Scheer designated LB 481 as a speaker priority bill.
LB 223 makes technical and procedural changes to statutory language passed by LB 471 in 2016, which established Nebraska’s comprehensive Prescription Drug Monitoring Program. The PDMP is a reporting system that provides comprehensive prescription information to prescribers to promote patient safety and improve delivery of medical care. Nebraska was one of the last states to launch statewide prescription drug monitoring, but has quickly received national recognition for an ambitious program that is embedded within the Nebraska Health Information Exchange system. This integration was the driving force behind federal grants that have provided seed funds for development of the PDMP free of charge to prescribers.
The system is also a vital tool in the prevention of prescription opioid abuse, a growing problem throughout Nebraska. Prescribers can now identify drug seekers in real time across the state, as well as provide valuable information to other prescribers. Additionally, avoidance of possibly fatal drug interactions is improved through information shared through the PDMP.
LB 481 is a critical piece of legislation for Nebraska to provide guidance for clinicians and dispensers as biosimilar products pass through the FDA approval process. Biosimilars, also known as follow-on biologics, are biologics manufactured using different cell lines mirroring the composition and treatment profile of an innovator product produced by another company. Biologics are an innovative class of medicines manufactured from living organisms. Unlike “small molecule” drugs that are chemically synthesized, biologics are derived from cells lines to produce a desired therapeutic substance. While the drugs you most commonly think of are chemically identical batches, biologics are complex, heterogeneous mixtures. While they have the same treatment and therapeutic uses, biologics using different cell lines will not be exactly the same.
Biosimilars present therapeutic and cost-effective alternatives to innovator products for providers and patients. Transparent communication between the patient, physician, and pharmacist is the hallmark of high quality patient care. LB 481 provides guidance to facilitate the communication when an approved interchangeable biosimilar product is substituted by the dispenser. Proactively establishing the communication framework for use of interchangeable biologics is a common sense step for promoting patient understanding of their own health care and communication among all members of the health care team. To date, 28 states have adopted similar legislation. Although the FDA is responsible for the approval of biologic and biosimilar medicines and their interchangeability, state law governs the the substitution by dispensers when a different biologic was prescribed.
Common sense steps to adopt the use of new technology to improve both efficiency and safety in health care ultimately help reduce costs and improve patient outcomes. I am grateful to Speaker Scheer and Senator Howard for utilizing their priority designations to ensure both of these bills receive consideration by the full Legislature this session.
With the conclusion of public hearings, members of the Nebraska Legislature concluded the first week of full day floor debate. In four days a significant number of bills have already been advanced from first round debate, called General File, to the second round of debate, known as Select File. In addition to the original introduced language, a number of these bills were amended with with contents of several other pieces of legislation, creating a single, larger combined bill.
Although piggybacking bills onto another has become common practice, it can make it difficult for voters to follow the progress of legislation and get a full sense of what all has been added to a bill as it is advanced to further debate. While the amendments are posted on the Legislature’s website, they do not specify which bill they were originally introduced as. Furthermore, if the committee of reference did not take official action on a bill, there is no committee statement detailing the public hearing. As a senator, I cannot readily identify who supported and opposed the bill during its public hearing. While I can identify the source of the amendment and its original bill number during floor debate or by asking my colleagues, the voting public does not have ready access to that information.
It can also be difficult to assess the budget impact of amendments that are added to bills during General File debate. Each bill introduced has a fiscal note, which is the official projection by the Legislative Fiscal Office of the cost of a particular bill. This estimate applies only to the original bill as introduced. Only after amendments have been passed, added to the bill and advanced to Select File will a new fiscal note be generated to include the entire scope of the legislation. Thus, we literally must adopt the amendments and advance the bill to the next round in order to know what it will cost.
Given the slower than projected revenue growth and the need to strategically prioritize spending, careful scrutiny of the fiscal impact of any amendments is critical. I will not support amendments or the advancement of bills to further debate if complete information regarding the cost is not readily available. Unless amendments are made, bills advance from Select File to Final Reading via a voice vote by acclamation. Assuming we will get full information about the budget consequences of a bill at some further point in the process is not a good practice for advancing a bill.
I am evaluating amendments and bills using several criteria. First, legislation must not have the effect of a tax increase. At a time when Nebraska families, farmers, and businesses are struggling to meet their needs and pulling back on discretionary spending, I will not increase their tax burden. Second, I will not support new programs without a reduction in spending in another program. New programs must have a higher priority than existing programs. Finally, if an amendment is attached to a bill that I would not support as a stand alone bill, I will not vote to advance the full bill to which it is attached. Linking a bad bill to a good one does not make it better, nor does it eliminate my concerns with the bill. For example, attaching a tax increase to a bill I support will not force me to support the tax increase. I will vote against the entire bill.
As voters and taxpayers, I encourage constituents to keep up to date on the status of bills of interest through the website of the Nebraska Legislature. Access to proposed amendments, fiscal notes, committee statements detailing the public hearings, and voting results are all available in real time. If you have any questions about the status of a particular bill, please do not hesitate to contact my office.
Don’t “Kick the Can Down the Road” On Spending Decisions
Nebraska has a proud tradition of “pay as you go”. Unlike many states that have created a perpetual cycle of budget turmoil with malaligned spending and revenue, Nebraska remains in a strong fiscal position even when revenue growth slows below projections. Nebraska has avoided the roller coaster experienced by many other states due to one simple rule: we don’t spend money we don’t have.
A constitutional balanced budget requirement, a strong cash reserve, and state policies that promote use of trusts instead of bonding into the future enable long term, structural fiscal stability. Currently, the requests for state General Fund spending exceed projected revenues. There are a number of ways the Nebraska Legislature can address that gap. One short term way to balance the budget is the use of one-time infusions of cash to the General Fund from various sources. These include Cash Funds that represent specific taxes and fees that have accumulated balances in excess of the funding needs of the program. Access of funds from the Cash Reserve, also known as the rainy day fund, represent one time dollars. A proposal to decrease the minimum cash the state is required to keep on hand to pay bills throughout the year also represents a one-time accounting shift to balance the budget.
Each of these one time options avoid the unpleasant task of having to deny requests for spending. They can balance the budget in this biennium. However, if the amount of these fund transfers exceed the amount of revenue growth in the next budget cycle, the spending decisions will have simply been postponed for two more years. The state budget will not be in structural balance.
In fact, with the automatic 1.5-2.0% annual growth in state General Fund expenses due to increased salary and health care costs of state employees alone, it is highly likely cuts to specific programs would be required in the next biennium even if we meet revenue projections. To illustrate, the current projection by the Nebraska Economic Forecasting Advisory Board shows a 5.9% increase in revenue growth, which is $304 million. About $80 million of that new revenue will be need to meet increased employee costs. That leaves $225 million to backfill the budget holes filled with one time money in the current budget.
The ability of revenue growth to resolve the current budget situation is dependent upon the amount of one time dollars used to close the gap in the current budget. If cash transfers into the General Fund exceed approximately $225 million, we will be required to cut spending in the next budget despite meeting ambitious revenue growth projections. Any additional state spending for education, property tax reform, medicaid, or corrections would require even deeper cuts to other programs. If revenue growth does not meet 5.9%, the hole gets even deeper.
Kicking the can down the road isn’t the Nebraska way. Your family knows paying ongoing household expenses with your birthday money, while not reducing discretionary spending, is a plan for financial disaster. Denying funding requests and cutting discretionary spending is unpleasant. Setting spending priorities takes political will. Protecting specific pet spending at the cost of long term structural balance of the state budget is short-sighted and dangerous. Assuming Nebraska taxpayers should foot an even higher tax bill to avoid making these tough choices is unacceptable.
As a member of the Appropriations Committee, I have had difficult conversations with a number of constituents, local elected officials, and special interests. My decision not to support funding requests at this time are not because I do not recognize the value of the program or support its goals. Rather, I must prioritize the long term fiscal health of the state of Nebraska for years beyond my time as a state senator above my personal discomfort of having to say “no” to funding requests. That is the job you sent me to Lincoln to do.
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.
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