Ahead of floor debate on the state’s budget package later this week, two members of the Appropriations Committee shared highlights of the budget bills and insight on how the proposal came together.
Sen. Anna Wishart, of LD 27, and Sen. Myron Dorn, representing LD 30, discussed the budget in an hour-long webinar on Monday hosted by OpenSky Policy Institute, the Coalition for a Strong Nebraska, the Nonprofit Association of the Midlands and the Nebraska Civic Engagement Table.
Previewing the proposal
The committee’s budget proposal calls for significant one-time investments and would increase spending from the state’s General Fund by 2.3% over the next two years, senators said. It leaves space for about $700 million in other considerations – including proposed tax cuts – while maintaining a rainy day fund of $1.026 billion.
The proposal includes an initial transfer of $1.25 billion over two years into an Education Future Fund that will help the state to fund K-12 public education, including an increase in funding for special education. One-time investments would include $575 million for the proposed Perkins County canal, an additional $96 million for construction of a new state prison, as well as investments in affordable housing and roads and bridges.
Senators noted the unique aspects of weighing this year’s budget proposals – how to address an unprecedented budget surplus, due in large part to federal funding – over $24 billion – flowing into the state over recent years.
“There are opportunities for us to make investments in our state and in our state government, in economic development and infrastructure in particular, and that’s really the direction our Appropriations Committee went,” Senator Wishart said, adding that senators need to be cautious to maintain a healthy cash reserve to protect against an economic downturn and that any long-term obligations are sustainable.
Those obligations potentially include proposals from the Revenue Committee to cut personal and corporate income taxes (LB 754) and extend property tax credits (LB 243). Both bills have a modest initial impact on state revenues but include provisions that would escalate the loss of funding available for services that all Nebraskans depend on through 2029.
While the Legislature is tasked only with balancing its budget over the next biennium, Senator Dorn said his focus was to leave the state on strong financial footing four years down the road.
Other highlights
- Amid inflation pressures and workforce challenges, the senators cited across-the-board Medicaid provider rate increases included in the budget, with a 3% rate increase in the first year of the biennium, followed by a 2% increase in year 2. This totals to $80 million from the General Fund. Senator Dorn noted the availability of additional federal dollars for Medicaid expenses. The budget also accounts for salary increases agreed to for state employees of approximately 7% in the first year and 5% in the following year.
- Senators outlined their on-going work to manage the appropriation of over $1 billion in ARPA State and Local Fiscal Recovery funds from the US Treasury. This year, the Appropriations Committee has proposed shifting $180 million in unallocated funds designated for projects in east Omaha to instead help the city of Lincoln in obtaining a second water source. ARPA funds that were designated for east Omaha projects will be shifted to General Fund obligations paid out of the state’s cash reserve.
Tuesday marks Day 70 of the Legislature’s 90-day session.
More information from OpenSky Policy Institute
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