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Sen. Steve Erdman

Sen. Steve Erdman

District 47

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Straight Talk From Steve…
January 4th, 2019


On the last day of 2018 the Legislature’s Planning Committee released its Final Report covering the 2017-2018 Biennium. The report received the unanimous support of its committee members, but contained some very bad news about the State’s financial status. In short, the report warned that the State’s cash reserves, also known as the Rainy-Day Fund, have been depleted down to a dangerous level. The conclusion of the report was that the Legislature needs to restore the Rainy-Day Fund to two times an average month’s revenue over the course of the next two biennial budgets.

According to the Planning Committee’s report: “During the past two biennial budgets cash reserves were approximately halved, from approximately $700,000,000 to $300,000,000. Although the reserves are intended to serve the function of a shock absorber smoothing out the fiscal road in tough times, this dramatic halving occurred during a time of reasonably normal economic conditions. Simply put, the draw down on reserves meant expenses were not cut enough or revenues were not raised enough. In either case, the trend is most disturbing, and should it be permitted to continue, a fiscal crisis will ensue.”

The Planning Committee’s Final Report did not tell me anything I did not already know. In May of 2017 I held a press conference where I suggested that the Legislature cut $250,000,000 from its budget in order to make ends meet. The Appropriations Committee did not take my advice, and State revenues fell short of their projected goal by 232,000,000. Had the Appropriations Committee made the appropriate adjustments to the budget, the Final Report of the Legislature’s Planning Committee would not have contained such a dire warning of a looming fiscal crisis.

The State Legislature will now have to begin the new legislative session in a huge financial bind. Because voters approved Medicaid Expansion in November, legislators will be searching for a way to pay for it without dipping into the State’s Rainy-Day Fund. Moreover, the most pressing need facing Nebraskans is the need for property tax relief, which can only result in lower revenues for the State. We can now add to this financial burden the Final Report of the Legislature’s Planning Committee which directs the State to replenish its cash reserves by some $450,000,000 over the course of the next four years.

Make no mistake about it, there will be some in the Legislature who will want to raise your taxes. They will look at raising your sales taxes (including taxes on Internet sales), your gasoline taxes, your cigarette taxes and even your State income taxes as a way to generate more revenue for the State. However, I have said many times before, and so I will say it again: Nebraska does not have a revenue problem; we have a spending problem. We got into this mess by spending too much money, so the only way out of it will be to reduce spending. Because very few Nebraskans can actually afford a tax hike, why should we raise taxes to pay for the past mistakes of the Legislature? As long as the Legislature continues to spend money like a drunken sailor, I will find it difficult to support any bill which comes with a hefty fiscal note.

Unless State revenues can somehow magically increase, the next two years should be about reducing the size of our state government, not increasing it. Unfortunately, the make-up of the Legislature continues to slide in the direction of fiscal irresponsibility. As the population of socialists from Eastern Nebraska continues to increase in the Legislature over and against the fiscal conservatives from Western and Central Nebraska, the prospects of ever restoring our cash reserves or balancing our budget without dipping into our Rainy-Day fund becomes ever-increasingly hopeless. Unless the Legislature can somehow figure things out, the Planning Committee’s stern warning of a looming fiscal crisis remains an approaching reality for the State. In fact, many, including me, would say that day has already arrived.

Sen. Steve Erdman

District 47
Room #12th Floor
P.O. Box 94604
Lincoln, NE 68509
Phone: (402) 471-2616
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