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Sen. John Kuehn

Sen. John Kuehn

District 38

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On Tuesday, May 23rd the First Session of the 105th Nebraska Legislature adjourned for the year. Speaker Jim Scheer ended the session on Legislative Day 86, four days short of the maximum 90 days in the first year of the biennium. The Legislature will formally reconvene on January 3, 2018 for a 60 day session. Although the Legislature is not in session, work continues on constituent services, interim studies, and revision of legislation. During the interim period, the Executive Board of the Legislative Council, of which I am vice-chair, supervises the operations of the Legislature as a state agency.

Of the 667 bills introduced during the first ten days of the session, 173 were passed and signed into law. Those bills passed with an “emergency clause” became effective upon their signature by the Governor. The majority of bills will become law 90 days after their signature. Because this is the first year of the biennium, bills not Indefinitely Postponed or “killed” remain active into the next session. 105 bills remain on General File, the first round of debate by the full Legislature, while 9 have advanced to Select File, the second round. Over 300 bills remain in their assigned committee awaiting action.

The primary focus of the legislative session was addressing the lower-than projected revenue in the current fiscal year and developing the next two year state budget to take effect July 1, 2017. In an unprecedented accomplishment, the Appropriations Committee, of which I am a member, held public hearings and advanced a deficit budget for the current fiscal year within the first 6 weeks of a biennial budget session. Work then began on the next two-year budget, which was passed by the full Legislature on Day 79.

Many states struggle to pass a budget, much less a balanced one, within the course of their regular session. Regardless of your political opinions regarding the choices made in the budget, Nebraskans should take pride in the fact Nebraska state government developed and passed not one but two balanced budgets in a single session. While I do not agree with the use of $369 million of one time cash transfers to fund ongoing expenses, we did pass a balanced budget without raising taxes or eliminating state programs.

Going into the session, tax reform was a priority of many legislators. The Revenue Committee did advance a comprehensive tax reform plan that included a new method for valuing agricultural land based on the income it produced, a cap on the rate of valuation increase annually on agricultural land, a consolidation of income tax brackets, an increase in the earned income tax credit for low income families, and triggered 0.1% reductions in the income tax rate for business and families if certain revenue growth levels were met statewide. In theory, the package provided a benefit to all Nebraskans: agricultural land owners, low income earners, middle income families, and businesses.

Although the tax reform plan did not give all special interests everything they wanted, it did provide a step forward toward tax relief for almost everyone. Unfortunately, agricultural groups actively lobbied against the reforms, choosing no property tax relief this year over the basic steps forward offered in the package. Special interests advocating for more state spending, including schools, also opposed the tax reforms. Ultimately, the bill failed to advance, but remains on General File for next year. I was disappointed by the amount of misinformation spread to voters about the tax reform package by special interest groups. In some cases, tax dollars were used against taxpayers to lobby in opposition to their own financial interests.

I will continue my weekly columns throughout the interim. My goal is to provide residents of District 38 with greater insight into a number of topics discussed in the Legislature this session, as well as address topics likely to return next year. If there is a topic you would like addressed, do not hesitate to contact my office and suggest it. I am grateful for all of the newspapers across the district that provide this opportunity for me to communicate with citizens and voters about legislative issues. An informed electorate is the foundation of a successful democracy.

This past week Governor Ricketts returned the budget passed by the Legislature with several line item vetoes reducing spending. Included in the additional reductions was a 0.5% reduction in the operations budget of any agency that had not received a 3% or greater cut by the Legislature, excluding K-12 education and corrections. Additionally, the total appropriation for the Medicaid program was reduced to the original recommendation made by Governor Ricketts in his proposed budget in February. The Legislature passed a budget which had increased that appropriation above the request of the Department of Health and Human Services, which manages Medicaid.

Some members of the Legislature attempted to override the line item veto of the additional appropriation to Medicaid, but the Governor’s recommendation was ultimately sustained. As a member of the Appropriations Committee, I supported the original budget proposal from DHHS throughout the budget process, and did not vote to increase their spending above their request.

Opponents of the line item veto preyed upon misinformation and fears of the public to make their case for increasing the appropriation, rather than the facts. Care of Nebraska’s most vulnerable population is an important priority. Medicaid is the second largest expense in Nebraska’s General Fund budget, and is a program that has seen significant improvement in management of its resources in the past two years. This careful management has resulted in excess appropriations which have been returned to the General Fund over the past two fiscal years.

Any claim that the reduction to the total appropriations to Medicaid automatically results in lower reimbursement for services to providers is false. The Legislature does not set specific rates for reimbursement in the General Fund budget. A block of money, totaling $833 million, is appropriated as a pool to the Department of Health and Human Services. DHHS uses that money to fund the state’s portion of Medicaid expenses. That total amount needed to provide those services is based on a forecast that projects the total needs of the program during the coming two year budget. Appropriations are not made to a specific provider type or service, but rather to the entire budget program as a whole.

How the pool of money in the Medicaid budget is spent is a product of three factors. First are the provider reimbursements, which is the actual fee schedule for specific services to Medicaid patients by physicians, disability service providers, nursing homes, and other Medicaid service providers. There fees are determined by complicated rate studies which must be approved at the federal level by the Center for Medicaid Services. The federal government has extensive oversight over these rate schedules, since a percentage of the total reimbursement is paid for by the federal government. The federal share is determined by a factor known as the FMAP.

Medicaid is an entitlement program driven primarily by the other two factors that determine how the total appropriation is spent: enrollment and utilization. Enrollment refers to the number of people who participate in the Medicaid program in Nebraska. Nebraska has experienced steady to flat growth in enrollment in recent years. The third component of the equation is the utilization factor, which is the total costs to the state per enrolled Medicaid patient.

Thus, Medicaid does not operate from a fixed budget. It is a dynamic interaction of all three factors. Throughout the budget process, I have been carefully examining the total needs of the Medicaid program as a member of the Appropriations Committee. This has included discussion with DHHS CEO Courtney Phillips and Medicaid Director Calder Lynch. Through careful management and responsible budgeting on their part, they are able to successfully manage the Medicaid program with the $833 million proposed by the governor and ultimately sustained by the legislature this week. Their management approach to make better use of every state dollar is exactly the kind of process improvement that reduces excess and waste in government, while still meeting the obligations to our most vulnerable citizens.

Careful, thoughtful, and evidence based analysis is critical to all spending decisions. While political rhetoric makes for interesting headlines, prompts social media action alerts, and motivates voters to engage, if it is not accurate it complicates productive discussion and grinds effective government to a halt. To make the most responsible decisions for all Nebraskans, both those dependent on state programs and those paying taxes, I must actively seek and operate from accurate data and information. I encourage citizens to aggressively question information as well.

As is common in the closing weeks of a legislative session, a number of contentious issues have been discussed during floor debate. Fiscal issues like tax reform, levy authorities, bond priorities, and state spending in the budget draw sharp distinctions between political philosophies and, more commonly, rural and urban differences. Topics of a social nature, including eliminating mandatory minimum sentences, felon voting, prioritizing funding for comprehensive women’s healthcare, and voter identification issues demonstrate the differences in perspective among senators.

With so many complex and often emotionally charged topics debated and voted on in such a compact period of time at the end, coalitions and votes on one bill unfortunately bleed over and influence others. This is an unfortunate reality of the political process.

Understanding the entire scope of an issue is critical to productive dialogue and good policy. In an era of social media and “action alert” email blasts, special interest groups can quickly distribute talking points and political spin to voters and the media. In my experience as a state senator, I have seen many issues intentionally obscured by misinformation spread to generate opposition. I encourage all voters to thoroughly explore and understand issues of interest to them, especially before just accepting and perpetuating interest group talking points.

Many of the topics that have generated the most debate this session are complex and have significant historical context. Changes to tax policy, whether it be who pays property taxes, how property is valued, exemptions and credits applied to income tax, or even sales tax rates impact every Nebraskan in a different way. Changes in funding to a state program will have different results in each community. Seemingly straightforward topics like internet sales tax collection and craft beer distribution are complicated by interaction between federal law, state statute, and agency regulation. Unfortunately, much of the discussion on these topics resembles a Sunday morning talk show, with whoever shouts the loudest and the longest ending up triumphant.

I am very disappointed that tax relief will not happen again this session. The voices of hard working Nebraskans were drowned out by special interests serving their own needs. Despite a myriad of proposals put forth and a comprehensive package advanced to the floor by the Revenue Committee, lobbyists crying “it is not enough” and protecting their vested special interests made sure Nebraska ag land owners, working families, and business owners received nothing.

The biennial budget passed and sent to Governor Ricketts depends on an accounting gimmick and an unsustainable use of one time dollars to balance the state budget. Advanced over the objections of several Appropriations Committee members and a significant number of senators in the Legislature, the budget as passed puts the state on fiscally shaky ground if ambitious projections for revenue growth are not met in the short term. Long term, the stability of the budget will likely require even deeper cuts or tax increases in the next biennium. If revenues continue to lag, it is likely a special session will be required to make the spending decisions the majority of senators failed to make now.

As the session moves into its last full week, the final issues with support of a two-thirds majority of senators to move beyond cloture will be discussed and voted upon. Chief among them will be addressing any line-item vetoes by the Governor to the state budget. A vote of 30 of the 49 senators will be required to override any spending reductions made by the Governor. Pay close attention, as the results of those final votes will determine the trajectory of the State of Nebraska for the years ahead.

As the 105th Nebraska Legislature moves into the last month of the legislative session, the two most important functions of state government have been the topic of much debate: taxes and spending. Discussion of a comprehensive tax reform package and the state budget have dominated the time on the floor. Both are large legislative initiatives that impact the daily lives of every resident of District 38.

As a member of the Appropriations Committee I have been personally involved in crafting the 2017-2019 biennial budget during the entire session. As growth in state sales and income tax revenue continues to be slower than projected, spending decisions require greater prioritization. I, along with 2 other members of the Appropriations Committee, did not vote in favor the advancement of the mainline budget bill, the cash funds transfer bill, or the cash reserve transfer bill from the Appropriations Committee to General File. I have not voted to advance those three bills through the first two rounds of debate either.

Spending decisions are difficult. When revenues are high, it is easy to say “yes” to every new spending request and request for increases in spending. When the money is not available, saying “no” is difficult. Every dollar of the $4.3 Billion spent out of the General Fund has a constituency and advocate who will be affected. Distinguishing core functions and spending needs from that which is discretionary is essential. Accountability and transparency of how each of those tax dollars is spent is critical to evaluate the priority of each spending request.

To accommodate spending that exceeds the amount of sales and income tax coming into the state, the current budget proposal will transfer almost $209 million from specific Cash Funds into the General Fund. Cash Funds are fees and taxes collected for specific purposes to fund operations associated with those activities. For example, the documentary stamp fee collected on every property transfer is distributed to a number of economic development cash funds, such as the Affordable Housing Trust Fund and the Job Training Cash Fund. In addition, $173 million will be transferred from the Cash Reserve, known as the “rainy day fund”, to balance the General Fund. The minimum reserve requirement, which is the amount of cash the state must have on hand to ensure cash flow as the state pays its bills, was also lowered from 3% to 2.5%. That is a $45 million accounting change that permits new spending without matching revenue.

In total, $382 million of “one time” money is being used to fund on-going expenses in the proposed 2017-2019 biennial budget. Thus, 4.3% of the General Fund dollars spent in the coming two years for ongoing appropriations will be paid with one time cash transfers.

In order to meet those ongoing obligations in the next biennium, revenue growth will need to exceed the 4.3% level. An additional 1-1.5% growth will be needed to accommodate increases in state employee salaries and benefits. Failure to meet either target will require additional reductions to programs going into the future.

While I fully understand the need for some use of the Cash Reserve and one time transfers to balance the state budget, I do not support the magnitude of one time transfers used. Given continued low commodity prices, the challenges on the ag economy, and the overwhelming tax burden faced by Nebraska farmers and ranchers, meeting 5% or greater revenue growth in the coming two years is not a rational expectation. It is my assessment that the current budget as proposed is unsustainable.

Spending reductions are always painful. However, reasonable 1, 2, or even 3% reductions at a time are easier to accommodate than larger reductions forced by a fiscal crisis. By filling so large a gap between tax revenue and spending for ongoing expenses with one time money, we increase the likelihood that even modest revenue growth will require a special legislative session to adjust spending and balance Nebraska’s budget.

Sustainable spending is essential to fiscally sound state policy. Citizens that depend on state services need predictability for essential programs. The uncertainty created by an unsustainable budget negatively impacts all Nebraskans, and is not a policy I can support.

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.

Sen. John Kuehn

District 38
Room #12th Floor
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2732
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