Floor debate begins on elimination of city, county and NRD state aid

Approximately $22 million of annual state aid to municipalities, counties and natural resources districts would be eliminated under a bill debated on general file Feb. 8.

LB383, introduced by Bellevue Sen. Abbie Cornett at the request of Gov. Dave Heineman, would end state aid programs to the three governmental entities.

The bill would reduce available revenues for the affected entities generally by 2 percent, Cornett said, adding that this is significantly less than the cuts to state aid to schools of 12 percent and 5 percent cuts in Medicaid provider rates currently considered.

“This difficult budget time has brought us to a point where we need to rethink government,” she said. “This is the first step in cutting the budget.”

Speaker Mike Flood of Norfolk spoke in support of the bill, calling it a piece of the budget puzzle. In order to meet a billion-dollar shortfall, he said, cuts to programs like the one proposed in LB383 need to be adopted now.

Scottsbluff Sen. John Harms said LB383 would force local governments to consolidate services for savings and adopt budget cutting strategies already employed on the state government level.

Omaha Sen. Heath Mello said granting property tax relief through aid to local governments has been a longstanding policy of the Legislature. He said other cuts could be made instead, such as reducing staff and contracts at the state Department of Health and Humans Services, or reallocating a surplus currently in the Education Innovation Fund.

Omaha Sen. Jeremy Nordquist also opposed the bill, saying it would push several counties that have already raised their property tax levy rates to do so again in order to offset state aid reductions.

“We would like to pat ourselves on the back today and say we are making the tough decisions,” Nordquist said. “But we are kicking the can down the road to the final payer.”

Sen. Rich Pahls offered an amendment, defeated on a 10-36 vote, to add intent language to the bill discouraging cities, counties and NRDs from raising taxes to offset losses in state aid. He said his amendment would demonstrate a commitment to balancing budgets without tax increases.

Holdrege Sen. Tom Carlson opposed Pahls’ amendment, saying it would tie the hands of local governments.

Ellsworth Sen. LeRoy Louden offered an amendment to reinstate the aid programs in fiscal year 2013-14. He said the structure of the aid programs should be retained, so the Legislature has the option of resuming them in two years.

Retaining an unfunded state aid program would not be wise, said Lincoln Sen. Danielle Conrad. If local governments are partners with the state in the provision of needed services, she said, the state should be upfront and not mislead them into thinking the aid programs will resume.

The Legislature adjourned before voting on Louden’s amendment or the advancement of the bill.