Budget package clears second round with lower cash reserve, other changes

Lawmakers amended and advanced three components of the state’s $10.7 million budget package this week. The state budget is structured on a two-year basis, with the budget enacted during legislative sessions held in odd-numbered years.

Elmwood Sen. Robert Clements, chairperson of the Appropriations Committee, offered an amendment May 10 to LB818 that would lower the transfer to the state’s Cash Reserve Fund from the General Fund from $610 million to $440 million.

Clements said the change was brought at the request of Gov. Jim Pillen and would give the Legislature “more to work with” when enacting tax cuts and provide for a “building up” of general funds for future years.

“The $780 million — three quarters of a billion dollars — will still be in there, which is still over what historically we’ve had,” Clements said.

Bennington Sen. Wendy DeBoer questioned the change, saying it would bring the cash reserve balance below 16 percent of the state’s annual expenditures, which she said has been the benchmark for the so-called “rainy day” fund in the past.

“So, we’re basically using one-time funds from now to put in the general fund, to keep them in the general fund, so that in the future we can pay for the tax cuts that we do this year,” DeBoer said.

Sen. John Cavanaugh of Omaha also expressed concerns, saying the lower cash reserve balance should “raise red flags” about whether the state can afford the spending outlined in the rest of the budget package, including the proposed canal in western Nebraska.

“We are raiding the rainy day fund in the middle of spending all this money,” Cavanaugh said.

Elkhorn Sen. Lou Ann Linehan dismissed those concerns, saying the cash reserve, when combined with $1 billion in the Education Trust Fund, would provide more than enough cushion for the Revenue Committee’s tax package.

“We are fine with money,” Linehan said.

The Clements amendment was adopted on a vote of 31-9.

Senators also approved an amendment to LB818 offered by Brainard Sen. Bruce Bostelman. The amendment, adopted 42-0, would extend the County Bridge Match Program until June 30, 2029. The program, which provides a portion of matching funds to replace or repair deficient county bridges, is set to expire this year.

Speaking in support of Bostelman’s amendment was Plymouth Sen. Tom Brandt, who said his legislative district has more than 200 bridges across four counties, many in need of repair.

“This is critically important to all 93 counties in the state of Nebraska,” Brandt said.

After four hours of discussion on the bill, Arch offered a motion to invoke cloture, which ceases debate and forces a vote on the bill and any pending amendments. The motion was adopted 41-1 and LB818 was advanced to final reading by voice vote.

Mainline budget

Senators also made several changes May 10 to the state’s mainline budget bill, LB814, which contains recommendations for state operations and aid programs.

An amendment offered by Clements to make a number of technical changes to the bill included a provision originally outlined in Seward Sen. Jana Hughes’ LB772. As introduced, that measure would have provided $2 million in general funds to create the Residential Youth Parenting Facility Grant Program to build a facility in a primary class city to assist pregnant and parenting homeless youth. Lincoln is the state’s only primary class city.

As included in the Clements amendment, the proposal instead would use $1 million from the state’s Temporary Assistance for Needy Families block grant funds. TANF funds are used to provide direct cash assistance to families in poverty. The fund currently has a “rainy day” balance of unexpended funds of approximately $130 million.

Lincoln Sen. Danielle Conrad said she was “excited” to put more funding toward child welfare concerns in Nebraska, but objected to using TANF dollars for the proposal.

“We shouldn’t be raiding these funds that come to us for no other purpose … than to help the neediest Nebraskans work their way out of poverty,” Conrad said.

Sen. Machaela Cavanaugh of Omaha also expressed frustration that the TANF rainy day fund continues to be used as a funding source for projects not included in its intended purpose. Lawmakers should expand TANF eligibility instead of continually financing other projects with those dollars, she said.

“[There is] $130 million in the rainy day fund and we cannot get this body to increase eligibility … because everybody wants to steal the money for their projects,” Cavanaugh said. “[If we] give more money to the people that the program is intended for, there won’t be enough money for us to steal. We’d have to use our general funds and then we couldn’t give massive tax cuts to rich people.”

The amendment was adopted on a 29-3 vote. Clements later brought another amendment, adopted 41-0, to change the funding source for the grant program from TANF to general funds.

Senators also approved an amendment brought by Omaha Sen. Terrell McKinney that would place conditions on funding for a new state prison, authorized in LB814. The amendment, adopted 42-0, would require that a classification study for state correctional facilities be submitted to the Clerk of the Legislature by Dec. 31, 2023. It also would require evaluations of behavioral health staffing and programs for incarcerated individuals.

McKinney said the studies would hold the state Department of Correctional Services accountable by requiring them to provide information already requested by the Legislature in previous sessions.

Lincoln Sen. George Dungan supported the amendment.

“If we’re going to be building a new prison, it only makes sense to make sure that we are doing it in a way that is based on data — based on information — and that we’re holding to account the people that we have asked to do things in the past,” Dungan said.

The amendment was adopted 42-0.

Lawmakers also approved an amendment brought by Omaha Sen. Justin Wayne that would require that $2 million of the $10 million appropriated to the State Park Improvement program be allocated for construction of a building at Fort Robinson State Park to honor the 9th Cavalry Regiment — also known as the Buffalo Soldiers — which was stationed there.

The regiment was one of four segregated Black regiments, which Wayne said should be recognized for its significance in Nebraska history.

Gordon Sen. Tom Brewer supported the amendment, noting the “tremendous amount of history” that took place at Fort Robinson, including events impacting the Cheyenne and Sioux tribes and the death of Crazy Horse.

Clements initially opposed the amendment, saying the state Game and Parks Commission should have the authority to decide how much funding is put toward the project and whether or not a new building is required.

Wayne agreed and brought a floor amendment, adopted 43-0, that removed the construction requirement and specified that “up to” $2 million would be used to honor the Buffalo Soldiers. Wayne’s overall proposal was approved on a 44-0 vote.

Other proposals

Several other amendments to the mainline budget bill also were considered by lawmakers.

DeBoer brought an amendment, adopted 33-0, which would state legislative intent for the auditor of public accounts to examine the use of funds received by the state under the federal American Rescue Plan Act of 2021.

North Platte Sen. Mike Jacobson offered an amendment, adopted 41-0, which would allow the Behavioral Health Regional Governing Board to request a reassignment of funds to accommodate emerging needs identified by a behavioral health region to implement new services and supports or expand existing capacity.

Lawmakers rejected an amendment from Blair Sen. Ben Hansen to increase a general fund appropriation to the Environmental Quality program by $8 million, to be used for a grant to a first class city to expand municipal drinking water capacity.

Opponents said Cargill, which operates a corn-processing facility in Blair that is straining the city’s water supply, should fund any necessary expansion. The amendment failed on a vote of 19-16. Twenty-five votes were needed.

After four hours of debate, Arch offered a cloture motion, which was adopted 41-2. Lawmakers then advanced LB814 to final reading on a vote of 40-2.

Senators also advanced LB813, the final component of the budget package, to final reading on a 25-0 vote May 9. The bill would make adjustments to funding for state operations, aid and construction programs in the current fiscal year ending June 30, 2023.