LINCOLN — The University of Nebraska will have to overcome opposition from Gov. Dave Heineman to win approval for its four-part construction initiative.
The governor said Thursday the state's highest priority should be passing tax cuts, followed by rebuilding the cash reserve fund.
"The university may have some good ideas about some future projects, but their request is very bad timing," Heineman said. "It would be fiscally imprudent to steal money out of the cash reserve."
University officials have said they plan to seek $91 million from the cash reserve for the projects. A University of Nebraska Medical Center initiative to build a cancer center is the main component of the NU legislative proposal, which also includes a $17 million nursing facility in Lincoln, a $19 million health care training facility based at the University of Nebraska at Kearney and $5 million to plan a veterinary diagnostic center at the University of Nebraska-Lincoln.
The governor's position adds to the difficulties that the university plan faces in winning approval from the Nebraska Legislature, where it will have to battle myriad other ideas for state spending or tax reduction.
Among the ones introduced so far: the governor's plan to cut income taxes, child welfare reform, state college building projects, child care subsidies and school aid proposals.
The four university projects could even wind up being pitted against one another.
"Everything's competing against each other," said State Sen. Lavon Heideman of Elk Creek, the Appropriations Committee chairman. "This will be a year for the Legislature to look at priorities."
A key decision for lawmakers will be whether to go along with Heineman's call for income tax and inheritance tax cuts.
Heineman's plan would reduce revenue to the state by $130.8 million annually, leaving little wiggle room in the budget.
The governor last week proposed "tax relief for Nebraska's hard-working, middle-class taxpayers," saying the alternative would be "more spending for special-interest groups."
On Thursday he talked as well about the need to replenish the cash reserve to help the state through future economic downturns.
He said he would like to see the reserve fund grow to between $500 million and $600 million. The cash reserve is projected to hit $414 million by the end of the two-year budget period.
Speaker of the Legislature Mike Flood said numerous factors must be considered before lawmakers make some critical spending and tax-cut decisions. The February forecast of state tax revenues will be key, along with the certified figures on state school aid.
"We have a lot of potential ingredients in this year's legislative stew," he said.
Drawing funds for the university plan from the cash reserve, rather than the general fund, would avoid an immediate conflict with proposals for ongoing tax cuts or spending.
But selling the idea to senators may not be any easier.
Although Sen. Abbie Cornett of Bellevue co-sponsored the bill to provide $50 million for the UNMC cancer research and treatment facility, she expressed caution about depleting the cash reserve fund.
The fund was used in recent years to help reduce the bite of budget cuts.
It also has been tapped for large, unexpected expenses, such as replacing federal funds for the Beatrice State Developmental Center when the troubled institution lost its Medicaid certification.
"That's our rainy day fund," she said.
Having a strong cash reserve would be even more important if lawmakers passed tax cuts, which would leave less flexibility in the state budget, Heideman said.
"The more risk you have, the more you need to rely on your fallback," he said.
Sen. Tony Fulton of Lincoln, who sponsored the bill to provide $17 million for the Lincoln nursing facility, said he would be willing to take that much from the cash reserve "for something that is sorely needed in the state of Nebraska."
But he's not willing to tap the fund for the entire amount sought by the university, and he predicted that not all the projects could be approved.
"The reality of it is we're not going to spend $90 million," Fulton said.
The university's projects also will have to compete with construction proposals from the state colleges.
Sen. John Harms of Scottsbluff introduced a bill to put $22.3 million toward renovating the athletic facilities at Chadron and Peru State Colleges. He said the projects need discussion.
"We haven't put much money into the state college system," he said.
The university got $25 million last year for construction on the Innovation Campus, while lawmakers continued to tighten down on most state agencies.
The initiative outlined Wednesday represents the university's only funding request for the year.
While the university has other construction projects in the works, funding already has been secured for them.
World-Herald staff writers Paul Hammel and Leslie Reed contributed to this report.
Contact the writer:
402-473-9583, martha.stoddard@owh.com
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