Nebraska legislators are considering a historic transfer from the state’s Cash Reserve Fund next year, surpassing last year’s momentous allocation of federal ARPA funding.
The budget brought forward by the Appropriations Committee suggests spending $1.2 billion from the state’s cash reserve in FY 23-24. That’s more money going out in a single year than what is projected to remain in the Cash Reserve Fund after the withdrawals, and it’s more than the ending cash reserve balance at any point in state history, even when adjusted for inflation.
Two projects alone, the Perkins County canal and a new state prison, account for more than half of next year’s spending from cash reserves and a combined 13% of all budget expenditures outlined for FY 23-24.
The $575 million commitment to the canal, on top of $54 million allocated in the current fiscal year, is a huge investment in a project where many questions remain.
Additionally, $96 million from the cash reserve would go toward building a new prison to replace the Nebraska State Penitentiary, a project estimated to cost $335 million. The Legislature previously allocated $241 million toward a new prison.
Last year, the Legislature made historic allocations of $1.04 billion from the American Rescue Plan Act (ARPA) State Fiscal Recovery Fund. Those federal dollars targeted some 40 projects and initiatives, including replacing aging ambulances, boosting health care provider payment rates, developing affordable housing and building a health complex at the University of Nebraska at Kearney.
The ARPA funds were federal dollars. Proposing to spend $1.2 billion from the state’s Cash Reserve Fund in a single year merits careful consideration to ensure the financial health of our state for years to come.