5 top priorities in Nebraska’s latest budget (and 8 you might miss)
In odd numbered years, the Nebraska Legislature enacts its biennial (two-year) budget. The Appropriations Committee’s proposal typically comes a few months after the governor releases their proposed budget at the State of the State address at the beginning of the year. The version coming out of the Appropriations Committee is the one that will be debated on the floor of the Legislature. Here is a copy of the fiscal year (FY) 2021–2023 budget from the Appropriations Committee.
The budget situation in Nebraska has changed dramatically in the last year. At the end of the last session, the state had a projected shortfall of $787.5 million below the minimum reserve. As the state’s financial status improved, and with lower spending by state agencies, the result is a budget that is $211 million above the minimum reserve. The February forecast was also positive, which provides a more optimistic long-term outlook for the state.
Overall, there are five major focuses of this two-year budget:
- Cash Reserve – adds $412 million, to bring the balance to $763 million, or 14.2% of revenues. An ideal target is 16% of state revenues.
- Health care provider rates – gives a 2% per year increase, or $83.56 million, to the Department of Health and Human Services and other providers.
- Property Taxes – increases the original Property Tax Credit by $25 million in the first year and $38 million in the second for a total of $63 million. Also, with the cash reserve fund being above $500m, it triggers that all funds above 3.5% revenue growth will be added to the new LB1107 income tax credit for property taxes. This brings the current estimate of the credit to $313.7 million.
- Economic development – Increases Nebraska Career Scholarships by $17 million and the Business Innovation Act by $15 million.
- Other legislation – After all of the other budget items are accounted for, the committee has set aside $211 million for other legislation pending before the Legislature.
Other areas of focus include funding the building of a new prison. The cost is around $230 million and will be financed over the next 5 years. An important note is that the budget includes funding for TEEOSA, or state aid to schools. TEEOSA will see a $5.8 million reduction in the first year and a $24.2 million increase in the second year. According to the committee document, “the decline in TEEOSA state aid in FY2021-22 can be attributed to the growth in valuation being higher than the growth in school disbursements.”
While these are the headlines that most watchers will care about, I like to focus on some random things in the budget that you will not read about in the paper or see anywhere else. Below are eight random line items in this biennium’s budget.
- Statewide food inspections have a backlog due to the pandemic and $25,000 will be used to help speed the process and address the backlog.
- $27,996 for training equipment and bunker gear for the State Fire Marshall.
- The next required change in Nebraska’s state license plates will be in 2023, and $15.8 million will be spent over the next two years to purchase equipment and begin the production process.
- Safety improvements will be made to three airfields owned by the state in Fairmont, Harvard, and Scribner for $428,314.
- Creating an annual State Flood Mitigation Plan (LB632-2020) for soil and water conservation; $225,000.
- $50 million from the Cash Reserve to create a new U.S. Space Command HQ Fund to support the state’s bid for being selected as the site for the U.S. Space Command headquarters.
- An overall 2% increase in state support for the University of Nebraska; $37.4 million.
- The Nebraska Film Office receives $1 million to award grants for Nebraska-based films.
While there is much more in the 270-page budget proposal, there are bound to be changes as general floor debate begins this week. Click here to see all of the proposals the Appropriations Committee has made for this biennial budget.