Nebraska Legislature Approves Two-Year Budget

The biggest job of the Nebraska Legislature is almost complete – passing the state’s budget.  Nebraska lawmakers voted May 9 on the state’s two-year budget.  The budget has been sent to the governor where it awaits his signature.  The governor has five calendar days to sign the budget, veto the entire thing, or (most likely) line-item veto only specific spending items. 

While usually discussed as one thing, the state budget is actually comprised of several parts. Here we have the breakdown of the state’s budget as seen via the different funds.  The part most commonly referred to in the media and among lawmakers is the state General Fund.

The General Fund is funded primarily by income and sales taxes.  Cash funds include revenues and expenditures that are directly related to specific activities with sources outside of state government.  An example is the gas tax, which goes into the cash fund and is then spent directly via the Department of Roads. 

It is important to note that your federal tax dollars make up approximately 30 percent of our state’s budget each year – dollars the state relies on but has very little control over.  These funds are a result of grants or contracts from various federal agencies and are spent on programs such as Medicaid, aid to education, and other designated federal projects and programs.

Other funds included in the state’s budget are construction funds, revolving funds, trust funds and distributive funds.

When looking at spending, the General Fund is the one that is the most scrutinized.  Over the years, the state’s General Fund has grown, but so have the state’s population, and the cost of goods and services due to inflation. 

Since 2000, Nebraska’s population has grown 11 percent, while the U.S. dollar has experienced an average inflation rate of 2.06 percent each year.  That means Nebraska’s state budget has grown 31 percent since 2000 in inflation adjusted dollars. 

On a per person basis, the state is spending $2,213 per person in the current fiscal year, an increase of 18 percent since 2000.

One area where policymakers will want to pay more careful attention coming into the next session is the federal portion of the budget, where revenue growth can't be guaranteed.  With a new administration and the burden of the national debt weighing on Congress, federal policies can change suddenly.  That's why the Nebraska Legislature's Appropriations Committee has prioritized legislation to inventory federal funds coming into Nebraska and to create contigency plans in case of future cuts.  

With growth that is below Nebraska’s current rates of population and inflation, the General Fund budget is appropriately crafted to keep pace with the economic circumstances of many of the taxpayers who have the responsibility of financing the state’s priorities.

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