Additional legislative fiscal tools sought

The Legislature would gain additional avenues to address state and local government budget concerns under two bills considered Feb. 28 by the Executive Board.

LB713, sponsored by Omaha Sen. Tony Vargas, would add a new step in the Legislature’s budgeting process. The bill would require the legislative fiscal analyst to create additional revenue and budget reports throughout the biennium.

The reports would include a revenue volatility report in even-numbered years, a budget stress test in odd-numbered years and a long-term budget for major programs every four years.

Vargas, who is chairperson of the Legislature’s Planning Committee, said the bill is the result of that committee’s work. Research shows that states that engage in long-term budget planning are better able to address economic volatility, he said.

“In order to meet the needs of future Nebraskans, we have to start that planning now,” Vargas said.

Renee Fry, executive director of OpenSky Policy Institute, testified in favor of the bill. She said that stress testing in the past might have helped the state avoid painful budget cuts in difficult economic times.

“Stress testing is an important budgetary tool [and] with a possible recession in 2020, it’s prudent to prepare for all possible economic scenarios,” Fry said. “Recessions are difficult to predict and receipts can vary widely from projections.”

The committee also heard testimony on LB636, introduced by Gering Sen. John Stinner, which would create the Financial Condition of Counties and Municipalities Task Force.

The task force would consider the advisability of creating a system and rating criterion to detect, monitor and prevent financial distress in Nebraska cities and counties. It also would provide recommendations on the state’s role in alleviating such distress and present its findings in a report to the Executive Board.

Stinner said many rural communities face budget issues that leave them struggling to provide basic services and adequate public safety, often through no fault of their own. When political subdivisions encounter economic crisis, he said, the impact also is felt at the state level.

“Outmigration trends over the last several decades have threatened the stability of county and municipal government tax revenues, putting tremendous stress on local infrastructures,” he said. “I’d like some way of analyzing this.”

The task force would include the chairperson of the Appropriations Committee and one other member of the Legislature selected by the Executive Board as nonvoting members. The ten voting members would include the auditor of public accounts and representatives from cities, counties and schools.

Christy Abraham, representing the League of Nebraska Municipalities, testified in support of LB636, which she called a “sincere effort” to assist municipalities that are facing difficult times.

She said a task force would be a good first step toward deciding which factors should be taken into consideration in determining when a municipality might be in financial distress.

No one testified in opposition to either bill and the committee took no immediate action on them.