State budget advanced from second round

A state budget that would appropriate $7.1 billion of general funds during the next biennium advanced from select file May 5.

General funds expended in the two-year budget would increase an average of 2.6 percent per year, well below the 20-year average of 4.1 percent. By comparison, the budget proposed for fiscal year 2011-12 is $17 million less than that for FY2008-09.

Lawmakers began the year with a $985.5 million projected shortfall based on spending projections and revenue forecasts. Significant spending reductions made in the budget include a $67.7 million reduction in agency operations, $29.3 million less for health and human services provider rates and $19.8 million less for public assistance. The budget also takes into account LB383, which eliminated state aid programs to cities, counties and natural resources districts, for a savings of $44 million.

Medicaid and state aid to schools required additional state funds to make up for lost stimulus funds received last biennium. The proposed budget would increase Medicaid appropriations by $110.5 million and $140.8 million over the next biennium from FY2010-11 funding levels. Likewise, state funds appropriated for state aid to schools would increase by $10.7 million and $67.9 million from the current fiscal year, although the total appropriation still would be $200 million less than the combined state and federal funds for FY2010-11.

Other appropriation increases would include $20 million for the homestead exemption program and $18.5 million for employee salary increases, which, for the most part, are scheduled to take place in FY2012-13.

The Appropriations Committee’s budget package comprises eight bills. The bills were debated on general file May 2.

LB377, as amended by an Appropriations Committee amendment, would provide funding for new and existing capital construction projects, ranging from security system upgrades for the state Department of Corrections to new housing for the Hasting Regional Center Bridges Program.

Wilber Sen. Russ Karpisek offered an amendment to LB377 to remove a $25 million appropriation proposed for the University of Nebraska to finance the renovation of the 4-H Building and construction of the Food, Fuel and Water Research Building. Both projects are part of the Nebraska Innovation Campus.

Karpisek said the $25 million appropriation is not appropriate given the current economic climate, which has required deep cuts to education and human services. Further, he said, the Legislature made no commitment to provide funding for building maintenance and construction when it decided to move the state fair to Grand Island to make room for Innovation Campus.

Hastings Sen. Dennis Utter opposed Karpisek’s amendment, saying now is the time to provide an investment to serve as a catalyst for development at Innovation Campus. Many other states are not in a position to provide funding for projects fostering public-private partnerships, he said, which could give Nebraska an advantage.

Karpisek’s amendment was defeated 5-37 and LB377 advanced 40-2.

LB374, a bill to appropriate funds for state government expenses, was amended three times before it was advanced from general file 34-0. The first amendment, offered by Heidemann and adopted 35-1, would restore half of the funding for the Public Service Commission’s railroad inspection program, which was targeted for removal by LB255. The bill failed to pass on final reading, Heidemann explained, so the amendment was necessary to restore partial funding for the inspector.

Heidemann’s second amendment would provide an additional $15,000 to the Commission on Indian Affairs to carry out the provisions of LB1002, which was passed last year to support economic development, health care and law enforcement projects near Whiteclay. The amendment was adopted 34-0.

An Appropriations Committee amendment, which contained updated provisions of LB374, was adopted 34-0 and senators voted 34-0 to advance the bill.

LB379, a bill that would transfer funds from the Cash Reserve Fund, was changed by a Heidemann amendment to reduce transfers in accordance with increased revenues projected by the Nebraska Economic Forecasting Board. The Appropriations Committee amendment, adopted 41-0, would call for transfers of $256 million to the general fund. Heidemann’s amendment reduced this amount to $75 million.

Heidemann said the budget submitted by the Appropriations Committee does not require additional revenue, so extra funds projected by the recent positive economic forecast should be deposited in the Cash Reserve Fund. The board projected that revenues for the current fiscal year would be $82.5 million greater than their February forecast and $151 million greater for the next biennium. His amendment was adopted 40-0 and LB379 advanced 39-0.

LB380, a bill dealing with depreciation charges for state buildings, was amended by an Appropriations Committee amendment to repeal depreciation charges assessed to state agencies based on a percentage of capital construction costs. The depreciation surcharge was suspended for FY2009-10 and FY2010-11 and is scheduled to be reinstated at a 1 percent rate beginning in FY2011-12.

The committee amendment was adopted 39-0 and LB380 advanced from general file on a 38-0 vote.

As amended by an Appropriations Committee amendment 35-0, LB378 would provide a number of fund transfers, including:

• $220 million from the general fund to the Property Tax Credit Cash Fund;
• $25 million from the general fund to the Nebraska Capital Construction Fund;
• $6.3 million from the general fund to the Ethanol Production Incentive Cash Fund;
• $5.4 million from the general fund to the Water Resources Cash Fund;
• $970,000 from the Tobacco Control and Prevention Cash Fund to the Health and Human Services Cash Fund; and
• $470,000 from the Uniform Commercial Cash Fund to the Election Administration Fund.

LB378 advanced from general file on a 37-0 vote.

LB376 would appropriate funds for salaries of constitutional officers. After adopting an Appropriations Committee amendment 35-0 to add funding for a new district court judge in Lancaster County, lawmakers advanced LB376 on a 38-0 vote.

LB375, which would provide for the $12,000 annual salaries of Nebraska’s 49 state senators, advanced from general file on a 40-0 vote.

The final bill in the budget package, LB373, would provide for deficit appropriations and was advanced 33-0 after an Appropriations Committee amendment was adopted 33-0. Adjustments in the amended version of LB373 include $27 million in savings through a reduction in the FY2010-11 appropriation and $31 million in lapsed reappropriated balances.

Technical amendments were adopted to LB374 and LB376 on general file. All eight budget bills were advanced from select file on voice votes.

The state constitution requires that the budget be passed by the 80th day of the session, which falls this year on May 17.