This week will be busy as we begin the second round of debate on LB261 (mainline budget) and LB264 (cash fund transfers). Both bills passed the first round of debate last week, but the budget remains out of balance due to the latest report from the Nebraska State Economic Forecasting Board. At its April meeting, the Forecasting Board reduced the state budget forecast by an additional $190 million for the upcoming biennium.

In the second round of budget debates, we will consider a “white copy” amendment (AM1320) that essentially replaces LB261 with a proposal that includes additional revenue, spending cuts, and cash fund transfers. LB264 will also be replaced by a “white copy” amendment (AM1300). I expect to see many other amendments introduced, especially to AM1320, with alternative ideas for balancing the budget.

This week’s debate will make it clear which state Senators believe in less spending to balance our budget and how committed Senators are to preserving existing tax cuts, both to income and property taxes.

I have made my thoughts on the tax cuts well known. I believe that the income tax cuts need to remain in place if we want to make Nebraska attractive for new businesses to locate here and to keep existing large income taxpayers from leaving Nebraska. Unless you have been living under a rock, it is widely known that our property taxes are out of control and that preserving the property tax credit funds is important to taking some of the cost of K-12 education off the backs of property taxpayers.

I am open to repealing some sales tax exemptions on high-end goods that do not negatively impact low-income individuals and are not business inputs. Examples would be: pool cleaning, chartered jet travel, residential landscaping, and other items along these lines. I am also open to taxing pop and candy, as long as the proceeds are used to balance the budget and provide tax relief. I will remain opposed to more spending that does not directly invest in programs that incentivize more affordable housing and tourism, or provide a proven positive return on investment.

I will also remain opposed to tapping the principal allocated to the Perkins County Canal project. That project is well into the design phase and must be completed if we want to preserve Nebraska’s water rights on the South Platte River.

One thing I have learned during my time in the Legislature is that any funds that can be spent will be spent. That is why sweeping excess cash funds is necessary to both balance the budget and keep needless spending from occurring. I do, however, have concerns that some of the cash funds in the proposed budget took dollars that were already committed to projects underway. I will be working to restore those funds during this process.

It is important to keep in mind that the Appropriations Committee’s budget recommendations tried to take funds that evenly impact all areas of the state, and tried not to negatively impact programs. Because of that, I supported the first-round bills in their original form (as did my conservative colleagues), because if one Senator removed something, there would have been a tidal wave of items proposed to be removed. There is much work occurring behind the scenes to get it right.

In the end, I expect we will need to transfer up to $150 million from the state’s Cash Reserve Fund (rainy day fund) to balance the budget and preserve the tax cuts. This would still leave a healthy balance of over $650 million in the fund. This is well above the average balance and still leaves room for additional transfers in future years if we need it.

It will be an interesting week at the Legislature.

It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.