Agency chiefs warned of cuts

LINCOLN — In an ominous warning, Nebraska's budget czar told state agencies Monday that they need to consider cutbacks now because budget reductions are on the horizon.

State tax receipts are already $93.2 million below the projections used by the Nebraska Legislature this spring to craft a state budget for this year and next, State Budget Administrator Gerry Oligmueller said.

And the situation appears to be worsening.

The state expects tax revenues for September to be $40 million less than projections. Actual state tax revenues were $17 million below projections in July and August, the first two months of the fiscal year.

The impact could trickle down to local school districts, a key lawmaker said.

Oligmueller's comments came in an annual letter to state agency heads that typically advises them of procedures to make deficit budget requests and admonishes them to be prudent in requesting additional money.

But Monday's letter went much further, outlining the dismal tax receipts so far this fiscal year and urging agency heads to prepare for cuts.

Oligmueller declined in an interview to say whether a special budget-cutting session of the Legislature might be necessary before the body reconvenes in January. And no one else interviewed uttered the words “special session.”

But Gov. Dave Heineman, in a prepared statement, said he is concerned and apprehensive about the downward direction of tax receipts.

And two leading state senators said worsening state tax revenues will force some difficult spending cuts next spring, midway through the two-year budget.

“I think it's better for everybody to be forewarned so they have time to plan and prepare,” said Sen. Lavon Heidemann, chairman of the budget-writing Appropriations Committee.

Monday's warning was important because it could be early to mid-April before lawmakers can adopt budget cuts, leaving state agencies only a few months to respond before the current fiscal year ends June 30.

Interviews with a handful of agency officials indicated that all are already closely watching their spending, scrutinizing whether to fill job vacancies or follow through on capital purchases.

“We've had a pretty good sense of how the revenues are going,” said Michael Smith, director of the Nebraska State Historical Society. “We know from our national news that consumers aren't spending, and we're a consumer-driven economy.”

The Nebraska Game and Parks Commission lost 17 full-time positions last year, mostly by not filling vacancies, and the agency continues to keep a “very vigilant eye” on spending, said its director, Rex Amack.

University of Nebraska officials have not made definitive plans for potential budget cuts but are watching the tax revenue picture closely, NU lobbyist Ron Withem said.

Sen. Greg Adams of York, chairman of the Legislature's Education Committee, said he has been worried since lawmakers went home in May that skidding revenue would force cuts in state aid to schools.

Lawmakers were able to increase state aid to schools this spring because of federal stimulus dollars. But Adams said that this fall, he has been warning superintendents about the possibility of cuts in state aid next year.

Adams said he knows they are watching the economic picture. “I certainly hope they paid attention.”

Contact the writer:

402-473-9584, paul.hammel@owh.com

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