Chief Budget Writer Speaks on COVID-19 Impact

The Nebraska Legislature’s Appropriations Chair, Senator John Stinner, talked about the state’s budget situation as it relates to COVID-19 on the Platte Institute’s first webinar.  Here are some of the main takeaways from my discussion with Sen. Stinner:

• He is planning for a 10% reduction in expected revenue, which is approximately $500 million
• The state’s current cash reserve is at $455 million
• However, this puts Nebraska in a difficult situation for the next fiscal year if the cash reserve is needed to fill the ‘hole’

• Nebraska received $1.25 billion from the federal government, but the details of how that money can be spent has not been clarified
• The state has an account system set up to manage all the federal money that comes into the state and how it is spent so lawmakers have a clear picture of where it is going
• Many local communities rely on sales taxes for part of their revenue and they are hurting right now. He hopes some of the federal money can be used to help offset that loss

• This crisis could impact the state for the next 2 to 3 years
• The Legislature doesn’t HAVE to pass a budget because they enacted a 2-year (biennial) budget last year
• The Appropriations Committee wants to spend some money this year to address immediate needs. Those include:
  • $55.2 million for flood relief
  • Additional money for the homestead exemption
  • Needs for multiple areas of the Department of Health and Human Services
• The likelihood of major property tax reform/relief is very slim with the impending budget shortfall from the COVID-19 crisis
• He does not think it’s a good idea to raise taxes during a recession, so if there is a big budget shortfall next year, they will not turn to increasing taxes on Nebraskans as a solution