Legislature Votes First-Round Approval for State Budget

The Nebraska Legislature began debate Thursday on the state’s budget for the next two years, making only one change to the plan endorsed by the Appropriations Committee.

The budget proposed by the Appropriations Committee is for the two years starting July 1 of this year and running through June 30, 2023. The proposal calls for spending $9.7 billion, an average increase of 1.7 percent per year. The single largest increase, $83.5 million, is for a 2 percent pay increase for people who provide services to Nebraskans through the Department of Health and Human Services and for juvenile services.

The second largest increase, $63 million, is for a credit to offset property taxes levied by schools, cities, and other local governments. Sen. Rob Clements applauded that priority.

“I did want to let the taxpayers know that we are still thinking that it’s taxpayer dollars that we’re spending. It’s not government money. It’s your money. And we thank you for the taxes you pay, and when we have some extra funds, it’s my priority to send it back to where it came from,” Clements said.

Sen. Steve Erdman said the property tax credit would help, but noted it only partially offsets property tax increases of around $200 million a year. Another program giving an income tax credit against property taxes is projected to increase by $188 million next year. But senators including Lou Ann Linehan, chair of the Revenue Committee, argue without further controls on local government’s ability to tax, state efforts to lower property taxes won’t work.

The proposed budget would also increase the state’s cash reserve – the so-called “rainy day fund” – from the current $412 million to $763 million. That would raise it from 7.5 percent to just over 14 percent of state revenues, approaching the 16 percent of state revenues, or two months’ worth of spending, recommended by the Legislative Fiscal Office. Included in that reserve would be $50 million the state could contribute to building the United States Space Command Headquarters at Offutt Air Force Base in Bellevue, if Nebraska is selected as the site. The Trump administration initially selected a base in Huntsville, Alabama for the headquarters, but that decision is under review.

The proposed budget also sets aside $115 million, half the cost of a new prison proposed by Gov. Pete Ricketts. But it does not authorize spending that money yet. Several senators say they want to wait for results from a study of the state’s criminal justice system before committing to any new construction.

The budget proposal also leaves $211 million over two years for other proposed tax cuts or spending increases. Sen. Machaela Cavanaugh proposed using $54 million a year to eliminate a waiting list, consisting of nearly 3,000 people, for developmental disability services – services like respite care, home and vehicle modifications, and work support.

“We have an opportunity today, colleagues, to do something bold. We have an opportunity today to show the state of Nebraska and the country who we are as a state, and what we value. We talk about valuing life, and this is the greatest thing we can do for the people of Nebraska, for the families of Nebraska,” Cavanaugh said.

Sen. Steve Erdman opposed the proposal, saying that even if the money were appropriated, there are not enough people available to provide the services to those on the waiting list. Sen. John Cavanaugh suggested that was backward, because increasing the amount of money available would encourage providers to come to the state.

Sen. John Arch said the proposed budget already includes an additional $4.1 million to reduce the waiting list.

Sen. Anna Wishart said she supports more services for developmentally disabled people, but questioned whether an additional $54 million a year would be available beyond the current two-year budget.

“We need to make sure that when we make these commitments, especially when it is providing lifelong services to somebody who’s on this waiting list, we need to make sure that we have the dollars available way out beyond the biennium to support their needs. Otherwise, there’s a cliff effect, where we provide services to every single person on that waiting list, and then come two years when we don’t have the dollars to provide those services, all of sudden they’re not able to have them,” Wishart said.

Cavanaugh then withdrew her amendment, but said she would continue to fight for increased funding in the future.

Sen. Mike Flood was the next to propose spending beyond what the Appropriations Committee recommended. He offered an amendment to increase funding for aid to the arts, through the Nebraska Arts Council, from the proposed $100,000 to $1 million. Flood said the increase would boost economic development.

Sen. John Stinner, chair of the Appropriations Committee, objected that the Arts Council itself had asked for only $100,000, and a request for an increase could have gone through the committee.

“I’m not opposed at all to supporting Flood’s idea – Sen. Flood’s idea – at all. Don’t get me wrong. It’s the process. That just means everybody can stand up and do what they want with the budget because it’s a ‘statement,’” Stinner said.

Flood disagreed.

“This is the process, ladies and gentlemen. We are in a building, in a legislative process that is deliberative, and if the deal is that we have to accept that comes out of one committee as whole or nothing, then that is not the right way the place works,” Flood said.

Senators voted 28-12 to adopt Flood’s amendment.

Sen. Machaela Cavanaugh then interrupted debate on the budget to broach another subject. Cavanaugh had sponsored a resolution to create a special committee to investigate the contract the administration of Gov. Pete Ricketts signed with Saint Francis Ministries to provide child welfare case management services in Douglas and Sarpy Counties – a contract whose cost has doubled from its initial version.

The committee was approved, but Thursday, the Executive Board voted not to put Cavanaugh on it. She expressed outrage.

“This is beyond egregious. Why? Because I ask hard questions? Because I make people in authority uncomfortable? Too bad! That’s my job. That is your job. But hey – if you want to be puppets for the governor, be puppets for the governor,” she said.

Ricketts was not immediately available to comment. But Sen. Dan Hughes, chair of the Executive Board, defended the selection process.

“I feel bad that Sen. Machaela Cavanaugh is so upset about not being on there. But we chose the members of the committee that we thought would do the best job,” Hughes said.

At one point, Cavanaugh vowed to carry the debate on until midnight. But with few other senators lining up to speak she relented, and shortly before 7 p.m., senators voted 42-0 to give the budget bill first-round approval.