Budget plan being crafted

LINCOLN — Pieces of a budget-balancing solution started taking shape Tuesday in the Nebraska Legislature.

One committee voted out a bill that would curb the growth of state aid to schools by $31 million.

Another advanced a resolution calling for temporary furloughs rather than layoffs of state workers as agencies reduce their spending over the next two fiscal years.

And the Appropriations Committee wrapped up four days of public hearings on Gov. Dave Heineman's budget proposal.

The Appropriations Committee is scheduled to meet today to begin crafting its own plan for closing the state's budget gap. Other lawmakers are off for Veterans Day.

“Tomorrow is when the hard part starts,” State Sen. John Harms of Scottsbluff, the committee's vice chairman, said Tuesday.

Hearings with all state agencies revealed that the budget cuts are going to be very difficult and very detrimental, he said.

The governor's plan calls for most state agencies to cut spending by 2.5 percent in the fiscal year ending June 30 and 5 percent the following year.

It also calls for making smaller cuts in some agencies and programs, tapping various cash funds and taking back money that agencies saved from last year's budget.

The changes are being proposed to close a $334 million shortfall in the $6.94 billion, two-year state budget.

Meanwhile, Education Committee members sent their part of a budget solution to the full Legislature, advancing a bill that would keep state school aid from growing next year.

An amended version of Legislative Bill 5 would make a $31 million difference in state aid, with all districts feeling some effects. The bill makes a smaller cut than the $47 million proposed by the governor.

Sen. Greg Adams of York, the committee chairman, said new projections show that state aid would grow at a slower pace than expected next year under current law.

That means the state can balance its budget with smaller changes in the aid formula.

But committee members still agonized over the changes.

Sen. Brad Ashford of Omaha asked repeatedly whether the cuts had to be made and whether they had to be so large.

“(The bill) is a big, big cut, even though they can probably make it,” he said.

Other members said they saw few alternatives.

Sen. Ken Haar of Malcolm said the aid formula had to change because of the state's plunging revenue figures.

“We're trying to make it fit reality,” he said of the formula.

Also Tuesday, lawmakers got a bit of “not bad” news about state tax receipts for October.

Net state revenue for the month was only 1.8 percent, or about $3.5 million, below projections made in April.

State Tax Commissioner Doug Ewald said that figure was “not bad” compared with August and September, when tax receipts nose-dived 4.7 percent and 11.2 percent below projections.

Those dismal numbers fed a gloomy revenue forecast issued in late October and prompted Heineman to call state legislators into the special session.

The session, which began last week, is expected to continue through next week and possibly up to Thanksgiving.

Among other developments Tuesday, the Government, Military and Veterans Affairs Committee advanced a resolution calling on state agencies to consider furloughs for state employees rather than permanent job layoffs to meet the budget cuts.

“Some people see this as an opportunity to permanently reduce the size of state government,” said State Sen. Bill Avery of Lincoln, the author of the furlough resolution.

“If we're going to do that, let's plan for it and not do it in the middle of a financial crisis,” he said.

Five-day unpaid furloughs for all state employees would save about $15.2 million, which equals the one-year savings from eliminating 400 state jobs, based on an estimate by a Heineman administration official.

Harms and several other senators predicted that at least one Heineman proposal would be eliminated: Taking cash funds from “checkoff” programs financed by corn, sorghum, wheat and dry bean farmers.

The Appropriations Committee was told during its final hearings that the proposed cuts would further strain nursing homes and the agencies that provide community-based services to people with developmental disabilities.

Alan Zavodny, president of the Nebraska Association of Service Providers, said rate increases from the state have not kept pace with salary increases, health insurance, workers' compensation and other costs of caring for developmentally disabled people.

Eliminating a rate increase for next year could threaten the solvency of some agencies and would make it difficult to take in people from the waiting list, he said.

Brendon Polt, a lobbyist for the nursing home association, said many nursing homes also might close if the budget-cutting proposal were approved.

Kerry Winterer, CEO for the Department of Health and Human Services, said the department plans to deal with across-the-board cuts by eliminating some vacant positions, reviewing contracts to see which can be reduced or eliminated, consolidating local offices and reducing travel costs.

Contact the writer:

402-473-9583, martha.stoddard@owh.com

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