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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.