Now, budget-cutting pain begins

LINCOLN — Nebraska lawmakers headed home Friday after closing a $334 million budget gap, leaving state officials to figure out which jobs, expenses and projects will have to go.

Gov. Dave Heineman signed the budget-cutting package shortly after state senators, with little dissent, passed it.

The three budget-cutting bills passed on identical 47-0 votes. A measure that reduces state aid to local schools was adopted on a 40-7 vote.

The package contains no boost in state taxes but requires budget cuts in nearly all state agencies and aid programs.

Many got across-the-board cuts of 2.5 percent in the midst of the current fiscal year and 5 percent in 2010-11, while specific cuts were made to others. State aid to schools was reduced by about $32 million.

Senators also transferred nearly $70 million from various cash funds and took back about $62 million in savings realized by state agencies last year.

State officials said they expect that Nebraskans will feel the effects of the budget cuts next year. The state budget director predicted as many as 400 state employees could be let go.

At a press conference in La Vista, the governor said state agencies and local schools will do their best to make cuts that don’t affect services.

“But it will be difficult, make no mistake about it,” Heineman said. “It’s hard to reduce (about) $335 million out of the state budget and not have some impact.”

Among the potential effects would be slower response times to highway accidents and reductions in maintenance at state parks. Cuts in state funding also could translate into tuition increases at the University of Nebraska and state colleges.

“We’re going to notice it one way or another,” said State Sen. Tony Fulton of Lincoln, a member of the budget-writing Appropriations Committee.

Many agencies were deciding on cuts even before the Legislature finished its work.

In the Department of Health and Human Services, the CEO and division directors have been meeting for the past month to make budget decisions, said spokeswoman Kathie Osterman.

The department has a general outline of where to look — job vacancies, contracts, travel expenses and local office consolidation — but is working on specifics, Osterman said.

The Department of Roads has scheduled meetings for top- and mid-level management to discuss cuts, said Steve Maraman, the department controller.

“We’re going to ask everybody to go through their budgets again,” he said.

Gary Hamer, deputy director of the Nebraska Department of Economic Development, said that agency has been clamping down on travel, overtime and other expenses since July. He said officials will watch to see whether those measures are sufficient, especially for next year.

To handle the Legislature’s own cuts, the Executive Board voted Friday to roll back a $7-per-day increase in lawmakers’ expense payments and to freeze staff salaries at current levels.

The board also agreed to leave some vacant positions open, delay reprinting state laws and reduce equipment purchases.

Some lawmakers worried about whether this was just the first round of budget cutting in what many predict will be a slow economic recovery.

“This just may be the first Band-Aid. I hope not,” said Sen. John Wightman of Lexington, also an Appropriations Committee member.

The Legislature bridged the current budget gap with not quite $400,000 to spare.

Higher education took a smaller cut than what had been proposed — 1.8 percent this year and 3 percent next year — to avoid problems associated with federal stimulus funds already accepted by the state.

Some areas of the budget did not get cut, including state road-construction funds, money to address a waiting list for services for Nebraskans with developmental disabilities, and funds to operate the troubled Beatrice State Developmental Center.

Omaha Sen. Tom White, who is running for the Democratic nomination for Congress in Omaha’s 2nd Congressional District, was among the seven senators who voted against the state aid cut.

He said senators were unable to get accurate figures on the impact of the state aid adjustment and state job vacancies.

He also said he was upset that lawmakers didn’t amend the governor’s property-tax rebate program to eliminate $25 million worth of tax breaks that go to out-of-state landowners.

White’s bill proposing to do that was ruled outside the bounds of topics that could be discussed during the narrowly crafted special session.

Vic Covalt, chairman of the Nebraska Democratic Party, called the budget-cutting plan flawed and blamed its shortfalls on the governor.

“Across-the-board cuts will damage good programs and leave bad ones mostly funded. Foolish and expensive projects will go forward. And the fundamental problems with our system of financing government remain unaddressed,” he said.

Meanwhile, Heineman said he remained concerned about lawmakers’ actions to soften the budget cuts on state courts and the Legislature and their decision to take $2 million more than he had proposed from a state job training program.

He said he hopes legislators revisit those matters during the regular session of the Legislature, which begins Jan. 6.

Legislators have been in special session since Nov. 4, when the governor called them back to Lincoln in light of dismal tax revenue forecasts and a 4.4 percent drop in tax receipts last year. State tax receipts are expected to fall an additional 1.3 percent this fiscal year.

Individual income tax revenues, in particular, have fallen, which officials attribute to layoffs, furloughs and cutbacks in salaries and hours during the recession.

World-Herald staff writer Tom Shaw contributed to this report.

Contact the writer:

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

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