Proposal to end unfunded state mandates stalls

A proposed constitutional amendment that would require the Nebraska Legislature to provide full reimbursement to political subdivisions for any new program or expansion of an existing program stalled on general file Jan. 16.

LR18CA, introduced by the Government, Military and Veterans Affairs Committee, would require, beginning in 2026, that the state pay the full costs of new programs, or increased levels of service required under an existing program, either through general fund appropriations or an increase in state distribution of revenue to the impacted political subdivision.

If approved by lawmakers, the proposal would be placed on the ballot for voter approval in the 2026 general election.

Bellevue Sen. Rita Sanders, chairperson of the committee, said every mandate the state places on counties and cities, even in the service of valuable public policy, comes at a cost to those entities. The Legislature has studied the problem of unfunded mandates several times over the past 20 years, she said, but has failed to take meaningful action.

“LR18CA rests on a simple but important principle: when the Legislature assigns new responsibilities to local governments, it must also provide means to carry them out,” Sanders said.

Sen. Jane Raybould of Lincoln supported the measure, saying that as a former county commissioner and city council member, she experienced firsthand the challenges political subdivisions face in funding state mandates.

For example, she said, the 2011 decision by lawmakers to end county jail reimbursements cost Lancaster County $5.8 million. Because the Legislature can easily pass unfunded mandates — or cut off funding for existing programs — a constitutional amendment is necessary, she said.

“What discipline, what guardrails, besides something like this would do that job for us?” Raybould said.

Whitman Sen. Tanya Storer agreed. Lawmakers would need to “tighten up” the measure’s language on the next round of debate, she said, but senators should take action to demonstrate their genuine concern about the impact of unfunded mandates.

Opposing the measure was Sen. Bob Hallstrom of Syracuse, who offered a “whole host of concerns” regarding how the proposal would be implemented. He said it would be difficult to determine what qualifies as a “program” under the measure’s language and to determine how much a mandate would cost each political subdivision.

In addition, he said, the bar for making changes to the state constitution should be high and lawmakers could limit unfunded mandates through legislation instead.

Sen. John Arch of La Vista also opposed LR18CA, calling it an “unworkable” mechanism that would “tie the hands” of future Legislatures. He said defining a program’s cost often is a matter of perspective and that such determinations could be different for every city, county or school in Nebraska.

“What I see with something like this is … a never-ending battle over the argument of what is the cost associated with [a program],” Arch said.

Also expressing concerns was Elkhorn Sen. R. Brad von Gillern. The state currently provides $1.2 billion in property tax relief, he said, which is an indirect funding mechanism for state mandates that bypasses political subdivisions.

“I believe we are paying for these unfunded mandates already through the property tax relief that we’re providing to taxpayers,” von Gillern said. “As a state, we’re already parting with almost 20% of our state budget in order to offset these costs for the localities.”

Sen. Robert Clements of Elmwood offered an amendment that would allow the Legislature to increase the amount of a fee that a political subdivision is allowed to retain as another option for covering the cost of a state mandate.

Clements said he opposed LR18CA but wanted to improve the measure should it pass by providing an additional means of helping political subdivisions offset costs.

He later withdrew the amendment.

LR18CA failed to advance to select file on a 23-20 vote. Twenty-five votes were needed.