Bill transferring money to balance budget advances

Lawmakers began their second day of debate on Wednesday deciding how to make up for a significant shortfall in the state budget.

In recent years, the state has been flush with cash, thanks to post-pandemic revenue growth and an influx of federal dollars, but this year’s budgeting process has looked a little different.

Sen. Myron Dorn, a member of the Legislature’s Appropriations Committee serving his seventh year in the Unicameral, said most of the body lacks the institutional knowledge and experience that would be valuable.

“We've only dealt with, I call it, funds, excess funds, a great big cash reserve, and all of that," he said. "We haven't dealt with, I call it, a budget deficit.”

On Tuesday senators advanced the main appropriations bill for the next two years, but more work needed to be done to make up the deficit.

Wednesday morning, senators debated a second budget bill from Appropriations Committee Chair Rob Clements that would transfer money from agency-specific cash funds and into broader general funds.

Clements, an eight-year veteran of the Legislature, said the appropriations process has been especially challenging this year.

“This has been probably the most difficult one that I've had to lead, and we've been trying to keep agency services from being slashed, and that's why there was a lot of cash funds transfers," he said.

The biggest line items in Clements’ bill include transfers of $27.7 million from the Water Recreation Enhancement Fund, $20.5 million from the Economic Development Cash Fund and $15 million from the Economic Recovery Contingency Fund.

An amendment filed by Clements on Wednesday added more agency cash funds and dollars to the list.

The largest transfer in Clements’ amendment would take $12.5 million from the Department of Motor Vehicles Cash Fund. The Surface Water Infrastructure Fund, Racetrack Gaming Fund and State Visitors Promotion Fund would also lose several million dollars to the general fund.

Sen. Mike Jacobson said he agreed with the approach.

"I think it's prudent to take the dollars that are laying around and use those dollars before we start looking for new sources of dollars, or before we start cutting into actual programming," he said. "That's a prudent way to look at the budget, and that's exactly what Senator Clements is guiding us to do.”

But other senators objected to the idea.

Sen. Machaela Cavanaugh said the DMV is more fiscally responsible than other state agencies and warned that taking away their money would drive up fees.

“If they have $12.5 million sitting in a cash fund, it is for a reason, and it is not to fill the coffers of the wealthy Nebraskans who don't want to pause the income tax cuts. It is not for the governor to get property tax relief for his multimillion-dollar properties.”

Sen. George Dungan objected to the $2 million that would be taken from the State Visitors Promotion Fund under the amendment. Earlier in the session, the Legislature approved an expansion of the state tourism department’s spending authority.

“That's $2 million that you're not going to see marketing and grants and those kinds of things encouraging people from this state and other states to come to your town, to your village," he said. "So before you press green on AM1300, think about the impact and think about your constituents."

Other progressive senators questioned why agency cash funds were being taken from instead of considering a pause on income tax cuts or corporate tax incentives.

But Sen. Jared Storm pushed back on the idea.

“The state does not have a revenue issue. It has a spending issue," he said. "There are some in this body that truly understand this concept. Most don't. The freshman class, which I'm a member of, believe there's a true core group of senators who will do everything in our power to come up with a plan to reduce wasteful spending.”

After eight hours of discussion spanning two days, senators voted 34 to 6 to advance the cash fund transfer bill, as amended, to the second round of debate.

More from the Unicameral:

Legislature gives first-round approval to main budget bill

Appropriations Committee makes attempts to balance budget

Plan to scale back minimum wage hikes gets second approval

Legislature advances bill reducing inheritance taxes, raising county government fees

Lawmakers advance bill restricting some synthetic cannabis products in Nebraska

New economic forecast tightens state's budget squeeze

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