OpenSky analysis: Nebraska didn’t cut its way out of previous large shortfalls

OpenSky analysis: Nebraska didn’t cut its way out of previous large shortfalls

LINCOLN – Nebraska relied on more than just budget cuts and fund transfers to get through the last two major budget shortfalls, an analysis by OpenSky Policy Institute shows.

Lawmakers combined budget cuts, cash transfers and new revenues to get through shortfalls in the early 2000s and following the Great Recession, the OpenSky analysis showed.

“History shows that we haven’t cut our way out of large budget shortfalls,” said Renee Fry, executive director of OpenSky Policy Institute. “This is important to keep in mind as such an approach could have damaging consequences for our schools, roads, law enforcement and other services that are essential to our state and its economy.”

To address the shortfall that occurred in the early 2000s, Nebraska lawmakers used a $1.5 billion mix of budget cuts, fund transfers and tax increases to balance the budget. After the Great Recession, lawmakers used a $1.4 billion combination of budget cuts, transfers and an influx of federal stimulus dollars to balance the budget.

While the $556 million influx of stimulus dollars allowed lawmakers to avoid increasing taxes like they did in the early 2000s, the analysis noted the budget cuts lawmakers enacted at the time did lead to costly unintended consequences that the Legislature is still dealing with today.

“Budget cuts made during the last major shortfall contributed to the corrections and property tax issues we are confronted with today and they are powerful examples of the unintended consequences of budget cuts,” Fry said.