Fiscal volatility report requirement clears first round

A bill that would require the Legislature’s fiscal office to report on revenue volatility advanced from general file March 17.

LB33, introduced by Omaha Sen. Heath Mello, would require the fiscal office to produce a revenue volatility report in advance of new biennial budgets. Mello said the report would assist the Legislature in preparing for potential economic downturns and strengthening state fiscal policy.

“This is simply a recommended report that will help all of us to understand the nature of revenue volatility as it impacts the state’s economy and our state budget process,” he said.

The report would:
• evaluate the tax base and volatility of revenue streams that provide funding for the state General Fund budget;
• identify federal funding included in the state budget and any projected changes in the amount or value of that funding;
• identify and analyze the adequacy of current and projected balances of the Cash Reserve Fund;
• include revenue projections for the ensuing two fiscal years included in the impending biennial budget; and
• contain any other recommendations that the legislative fiscal analyst determines are necessary.

An Appropriations Committee amendment, adopted 39-0, removed a provision that would have required the report to include a recommendation of the appropriate Cash Reserve Fund balance adequate to sustain essential government operations in the event of a recession.

Mello said the amendment reflected concerns regarding potential differences of opinion among lawmakers as to the definition of essential government operations.

Following adoption of the committee amendment the bill advanced to select file 36-0.