After several hours of debate spanning two days, lawmakers gave second-round approval July 28 to two bills comprising the Appropriations Committee’s adjustment proposal to the state’s $9.4 billion budget.
The state budget is structured on a two-year basis, with the budget enacted during legislative sessions held in odd-numbered years. Adjustments are made during sessions held in even-numbered years.
LB1008, introduced by Speaker Jim Scheer of Norfolk at the request of Gov. Pete Ricketts, is the mainline budget bill. The bill would adjust appropriations for state operations, aid and construction programs in the current and next fiscal year.
Gering Sen. John Stinner, chairperson of the Appropriations Committee, said the committee’s changes, adopted during the first round of debate, would restore the state’s cash reserve, control state spending growth and attain a structural balance between revenue and spending.
As amended on general file, LB1008 includes $55.2 million to address damage from the 2019 floods. It also incorporates the provisions of 19 additional bills, with a total cost of $15.2 million. The measures included:
LB773, sponsored by Gothenburg Sen. Matt Williams, which would transfer $10 million in general funds to the Rural Workforce Housing Investment Fund;
LB827, sponsored by Omaha Sen. Robert Hilkemann, which would provide a $3.7 million increase in developmental disability provider rates;
LB1018, sponsored by Omaha Sen. Tony Vargas, which would appropriate an additional $1.5 million to aid local public health departments;
LB1079, sponsored by Lincoln Sen. Anna Wishart, which would appropriate $250,000 in general funds to the Nebraska State Patrol crime lab to support the timely processing of sexual assault forensic evidence; and
LB1097, sponsored by Omaha Sen. Mike McDonnell, which would appropriate $458,000 over two years to the state Supreme Court to increase staffing for youth problem-solving courts.
When the Legislature suspended the session in March, the committee’s proposal would have left $133.8 million to fund bills passed this year. After the state’s Economic Forecasting Advisory Board met July 23, Stinner said, that number has dropped to approximately $89 million.
Stinner offered an amendment during select file debate that would require any unallocated and unexpended coronavirus relief funds as of Nov. 15, 2020, to be reoffered through a grant process to meet remaining unmet needs, including rental and food assistance, small business and livestock stabilization, broadband, workforce retraining and child care.
“The $1.25 billion of COVID relief funds [that Nebraska] received in April must be expended by Dec. 31, 2020, or be returned to the federal government,” Stinner said.
In addition—if allowed by federal law—any unallocated or unexpended funds received pursuant to the federal 2020 Coronavirus Aid, Relief and Economic Security (CARES) Act, would be transferred to the Cash Reserve Fund on or before Dec. 26, 2020.
The amendment was adopted 33-0.
Omaha Sen. Machaela Cavanaugh offered an amendment that would outline how the state would appropriate the $258 million in CARES Act funds not yet allocated by the governor. Cavanaugh said the amendment would direct those funds to services and programs strained during the public health emergency.
Among other provisions, the amendment would appropriate:
• $100 million to reimburse necessary COVID-19-related expenses of counties, cities, villages and utility districts;
• $43 million for response and recovery grants for charitable organizations and providers to assist children, families and communities;
• $40 million in stabilization grants for charitable organizations and providers to cover operating expenses related to COVID-19; and
• $30 million to create a grant program to increase child care capacity for school-age children through age 13 who are not in school full-time and to support extended learning opportunities.
“Part of what I’m trying to do is to direct funds directly to individuals who are most in need,” Cavanaugh said, “but also to infuse cash flow into our economy.”
Sen. Sue Crawford of Bellevue supported the amendment. She said the funds could assist individuals in hard-hit service sector jobs who did not qualify for other assistance by bolstering existing programs administered through established nonprofits.
“Most of the money is focused on policies that are already in place,” Crawford said.
Henderson Sen. Curt Friesen cautioned against allocating additional funds at a time when long-range economic forecasts remain “pretty bleak.” The state is facing a potential shortfall in revenue needed to fund the next biennium budget, he said, and there is no indication of when economic activity will return to normal in light of the pandemic.
“If times are going to be this bad going down the road, if this was my personal budget, I would stop spending money,” Friesen said.
The Cavanaugh amendment failed on a vote of 16-28. Twenty-five votes were needed.
Friesen then offered and later withdrew an amendment that would eliminate a number of DHHS funding provisions outlined in LB1008, as well as $10 million for rural workforce housing.
The reductions would come from stripping the provisions of several proposals that were incorporated into the bill on general file, including $3.7 million to increase developmental disability provider rates and $1.5 million to local public health departments.
“It’s probably prudent for us not to be spending any dollars,” Friesen said.
Sen. Sara Howard of Omaha, chairperson of the Health and Human Services Committee, expressed “vehement opposition” to the amendment, which she said would cost Nebraska federal matching dollars and trigger a return of federal funds already dispensed to the state because it would violate rate methodology requirements.
In addition, she said, local public health departments currently are providing coronavirus testing, contact tracing and extensive data gathering in addition to their regular duties.
“It sends a terrible message for us to essentially underfund our public health departments in the middle of a pandemic,” Howard said.
After several hours of debate, Scheer offered a motion to invoke cloture, which ceases debate and forces a vote on a bill. The cloture motion was adopted on a vote of 40-7 and senators advanced LB1008 to final reading by voice vote.
LB1009, also introduced by Scheer at the request of the governor, would authorize and provide for certain fund transfers outlined in the mainline budget bill.
Stinner offered an amendment, adopted 40-0, which would transfer $60 million from the Governor’s Emergency Cash Fund to the state’s Cash Reserve Fund. In March, the Legislature appropriated $83.6 million to the emergency fund to support the state’s response to the coronavirus pandemic.
Stinner said more than $60 million of that transfer was not needed because of funds received from the federal government and should be moved to the state’s “rainy day” fund.
After additional debate, lawmakers adopted a cloture motion 43-4 and LB1009 was advanced to final reading by voice vote.
Also included in the budget package is LB927, which would provide for payment of claims against the state. During select file debate July 27, senators adopted an amendment offered by Lincoln Sen. Mike Hilgers to shift a $50,628 claim for attorney fees incurred by the State Racing Commission.
Hilgers said the racing commission was the subject of an action by the state attorney general’s office and, as a result, could not be represented by the office and had to hire outside counsel.
The amendment would direct that the resulting attorney fees be paid from the racing commission’s cash fund rather than the state’s general fund. Hilgers said it could set a bad precedent to use general fund dollars to pay fees through the state claims process that are the responsibility of a state agency.
The Hilgers amendment was adopted 26-18. Twenty-five votes were needed. Lawmakers then advanced LB927 to final reading by voice vote.