Budget package clears second round

Lawmakers gave second-round approval March 19 to the two remaining bills comprising the Appropriations Committee’s mid-biennium budget adjustment package. LB131, which made transfers from the state’s cash reserve, was advanced to final reading March 16.

The state budget is structured on a two-year basis, with the budget enacted during legislative sessions held in odd-numbered years. Sessions in even-numbered years are used to make adjustments to the state’s two-year budget.

Deficit appropriations

LB968, introduced by Norfolk Sen. Mike Flood on behalf of the governor, would provide for deficit appropriations.

Proposed appropriations would include:
• $17 million to the state Department of Health and Human Services (DHHS) to cover shortfalls due to developments in the child welfare reform effort and to reduce caseloads;
• $9.7 million to reinstate 1.5 percent of a 2.5 percent cut in Medicaid provider rates for the upcoming fiscal year;
• $4 million to reduce the state’s developmental disability waiting list; and
• $6.1 million to fund the design and construction of a veterinary diagnostic center at the University of Nebraska.

Lawmakers considered a series of amendments offered during select file debate.

Flood offered an amendment that would reduce the general fund appropriation to DHHS for the state’s Medicaid program in fiscal year 2011-12 and FY2012-13 by an additional $2 million per year.

Flood said the amendment would reinstate the governor’s budget recommendation to reduce the Medicaid appropriation by $5 million per year based on utilization projections. He said the change could be made without reducing provider rates, benefits or services.

Omaha Sen. Heath Mello said the Appropriations Committee based its proposed $3 million annual reduction on an understanding that Medicaid utilization fluctuates and that DHHS would require a deficit appropriation next year if costs increase.

Sen. Danielle Conrad of Lincoln also opposed the amendment, calling it a “budgetary gimmick.” She said there is no guarantee that funds would be available in future budget cycles to address Medicaid needs.

“Using one-time funding strategies to take care of ongoing needs – it’s putting together the budget with bubble gum and baling wire, and that’s not sound fiscal policy,” Conrad said.

The amendment initially failed 23-21, two votes short of the required 25. Flood offered a successful motion to reconsider that vote, saying the amendment was part of a package offered in consideration of a tax cut plan advanced by the Revenue Committee.

“I present these ideas with the idea of making room in the budget for what I think is going to be a decision we make here soon,” Flood said.

The amendment was adopted 28-19 on a second vote.

Another Flood amendment would have reduced the state’s appropriation to the Behavioral Health Aid program by $1.85 million in FY2012-13.

Due to legislative rules, the amendment was unable to be withdrawn, but Flood said many senators had expressed concerns about reducing behavior health funding. As a result, Flood asked lawmakers to vote against the amendment and it failed on a 0-34 vote.

A third Flood amendment, adopted 25-1, would appropriate $10 million transferred from the cash reserve to the general fund in LB131 for state aid to special education. The amendment also would reappropriate to the general fund $425,000 that was designated to the Community Corrections Council, which was eliminated in 2011.

Omaha Sen. Brad Ashford offered an amendment that would have appropriated $907,000 in FY2012-13 and FY2013-14 to renovate dormitories at the Youth Rehabilitation and Treatment Center (YRTC) in Kearney.

Ashford said the dormitories are “totally and utterly inadequate” and have not been altered since they were built in 1953. The facility’s open floor plan makes it difficult for staff to monitor the youth adequately, he said, which has resulted in an increased number of assaults as the center’s population has grown to include young people with more violent backgrounds.

Sen. Bob Krist of Omaha supported the amendment, saying the funding was needed to protect staff and rehabilitate the youth who are sent to YTRC-Kearney.

“I think it is up to us to make sure that the facility is properly configured and properly staffed,” he said.

Lincoln Sen. Colby Coash acknowledged that the center is outdated, but questioned whether investing in renovation was the best use of state dollars. The Appropriations Committee budget already includes funding for 15 additional staff members at YRTC-Kearney, he said, which should help decrease the number of assaults.

The amendment failed on a 20-20 vote.

A second Ashford amendment, adopted 25-11, would appropriate $60,000 to the Nebraska State Patrol to contract with the University of Nebraska to study sex offender recidivism data before and after the 2009 passage of LB285, which changed the state’s sex offender classification system from an evaluation of risk assessment system to an offense-based assessment system.

Sen. Gwen Howard of Omaha also offered an amendment that would prohibit DHHS from using funds appropriated to the department in FY2011-12 and FY2012-13 to pay transition costs relating to the termination of DHHS’s contract with KVC.

Howard said DHHS has committed the state to providing a “golden parachute” to KVC, the latest lead agency to leave the state’s troubled child welfare reform effort. The department agreed to pay the Kansas-based agency $6 million to cover various costs associated with ending their contract with the state, she said.

“We have much greater needs for our taxpayer dollars than contributing money directly to the bank account of an agency in Kansas,” Howard said.

Sen. Steve Lathrop of Omaha spoke against the amendment, saying it was too late for the Legislature to act.

“If it is a signed contract or an agreement [that] we have entered into, we can pay it now or we can pay it in a court judgment,” he said. “We’re all frustrated with the cost of the cleanup, but we have to pay our bills.”

The amendment failed on a 4-32 vote.

Following adoption of a technical amendment, senators advanced LB968 to final reading by voice vote.

Other fund transfers

LB969, introduced by Flood at the request of the governor, would authorize various fund transfers.

Among other provisions, the bill would:
• authorize transfers up to $3.8 million to the Ethanol Production Incentive Cash (EPIC) Fund;
• reduce by $2.9 million annually, through 2015, the amount transferred to the Nebraska Health Care Cash Fund;
• create the State Colleges Sport Facilities Cash Fund, consisting of transfers from the Civic and Community Center Financing Fund, gifts, grants and other contributions;
• transfer $99,600 from the state Department of Administrative Services State Insurance Fund to the Roads Operations Cash Fund; and
• create the World Day on the Mall Cash Fund.

As amended on general file, LB969 also would transfer $250,000 per year through 2014 from the Civic and Community Financing Fund to the State College Sports Facilities Cash Fund. The transfer would increase to $400,000 annually beginning in 2015.

Fullerton Sen. Annette Dubas offered an amendment during select file debate to eliminate that transfer.

Dubas acknowledged that Nebraska’s state colleges are in need of funding for maintenance of sporting facilities, but said the money should come from the state’s general fund and not at the expense of a fund designed to finance community and cultural centers.

She said the state Department of Economic Development, which administers the fund, allocated $1.5 million in grant dollars last year. More Nebraska cities could benefit from the fund, she said, if more money were available.

“Grant applications are being turned down … not because they don’t have merit, but because they don’t have resources to fund all the applications,” she said.

Sen. Lavon Heidemann of Elk Creek opposed the amendment, saying the Civic and Community Financing Fund would have enough money to support both priorities once Lincoln’s new arena begins contributing to the fund. In addition, he said, state college facilities are used for a variety of purposes and are as vital in rural areas as traditional community centers.

“This is not just a college thing,” he said. “It’s a rural thing.”

The amendment failed on a 20-22 vote, five votes short of adoption.

A second Dubas amendment that would have stipulated that the Civic and Community Financing Fund be used to fund only projects proposed by municipalities in FY2012-13 and FY2013-14 also fell short on a vote of 19-22.

An Ashford amendment, adopted 27-6, would transfer $60,000 from the Commission on Public Advocacy Operations Cash Fund to the Nebraska State Patrol Cash Fund to conduct the sex offender recidivism study authorized by his amendment to LB968.

Finally, an amendment offered by Flood and adopted on a 42-0 vote would reduce the general fund transfer to the EPIC fund by $2.8 million. He said the fund does not need the additional appropriation to operate.

LB969 was advanced to final reading by voice vote.

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