Senators advancing budget amid questions over fund transfers

The Nebraska Legislature gave first-round approval Wednesday to changes in the state budget, amid questions about whether state agencies are squirreling away too much money.

Among the changes the Appropriations Committee is proposing to the state’s two-year budget is a $70 million transfer out of the state’s unemployment insurance trust fund. That’s a pot of money, raised by employers paying a tax on their payrolls, which is used to pay unemployment benefits. Under the budget proposal, some of it would be transferred to the general fund, where it can be used for many other purposes. Sen. Wendy DeBoer said that raises a question about the tax.

“Why are we charging people so much? If we're not using that amount, we should be reducing the amount we're charging them because what essentially we're doing is a tax shift. We're promising people we're going to use it for one purpose. And then we're taking money that we collect from a small group and using it for a general purpose,” DeBoer said.

DeBoer’s question related specifically to the unemployment insurance fund. But the idea is just one example of the committee’s proposal, following largely along lines suggested by Gov. Jim Pillen, to “sweep” around $200 million extra funds held by state agencies and use them to balance the two-year, $10 billion budget and help pay for property tax cuts.

Another example is a proposal to reallocate $10 million that’s gone unused by the state’s court system. Sen. George Dungan said the courts actually need another $600,000 to pay interpreters, and that extra funding allocated for that purpose last year was just a temporary “bandaid.”

“What I know is if that cost goes back down, the court interpreters are not going to be able to work and we're going to lose them to other industries that pay much, much better wages, like the medical industry, or private corporations who can actually pay their living wages they're asking for, and we're not going to have them in court. And that's going to result in cases being continued. And that's going to result in people remaining in custody longer and ultimately, it's going to result in taxpayer dollars being spent simply because our court interpreters don't have sufficient funds to continue working in this job,” Dungan said.

Sen. Rob Clements, chair of the Appropriations Committee, said the courts already have enough money to pay interpreters more.

“The court does have the money and we've discussed this in committee under the hearing with the Supreme Court representative. As of June, fiscal year end, they were projected to have $8 million of unobligated funds leftover,” Clements said.

Sen. John Cavanaugh argued that the court needs that money to help defray costs of a new computer system which will cost in the millions.

“That is something we really need. That, however, will be expensive to implement. And the court may be sitting on some of that money that they are intending to be a contribution towards that update. This is something we really need. They need to have the money to do it. They're gonna come and ask us for it, but they have some money that they could use for it,” Cavanaugh said.

Sen. Christy Armendariz said the courts and other agencies shouldn’t build up big savings accounts.

“I have a problem with agencies in general, keeping a lot of cash on hand when they, over the years -- and we looked back years of their spending -- do not spend it and they keep collecting it. I think it's irresponsible of us to hold this money for a rainy day when I don't believe taxpayers had that intent,” Armendariz said.

Another part of the budget proposal would take $25 million from the Affordable Housing Trust Fund, geared toward lower-income purchasers, and redistribute it, with $20 million going to rural workforce housing and $5 million for middle-income housing. Supporters say the Affordable Housing Fund is not being used to the fullest extent. Sen. Tony Vargas says the state is not disbursing the money quickly enough. Armendariz said she’s leery of government involvement in any type of housing.

“I have a I have a hard time with government propping up housing. I remember all too well the housing crash. And to me, government propping up housing is just asking for that. We need to balance housing for sure in the free market, but government propping up housing does not balance the market,” she said.

Senators gave first-round approval to the first of a series of bills proposed by the Appropriations Committee without making any changes. But Sen. Danielle Conrad suggested changes are still on the way.

“I think that there is definitely a very, very productive negotiation happening in regards to some key issues involving behavioral health and developmental disabilities, tribal water, access to justice issues,” Conrad said.

Budget debate continues Thursday.