LINCOLN — Keen budget watchers in the Nebraska Legislature gave good reviews Thursday to the University of Nebraska's request for $91 million for new construction projects.
But senators on the budget-writing Appropriations Committee also signaled that NU may have to settle for less because of the slowly recovering economy and competition with tax cuts and other spending proposals.
"This is the year that the Legislature is going to have to look at priorities," said the committee's chairman, Sen. Lavon Heidemann of Elk Creek. "But I do believe you don't want to get too far behind on infrastructure projects because it takes too long to catch up."
Another committee member, Sen. Jeremy Nordquist of Omaha, added, "They're not likely to get all $91 million, but at least we can make a significant investment."
NU officials produced a parade of people Thursday to testify in favor of its "Building a Healthier Nebraska" initiative and push back on criticism from Gov. Dave Heineman that the projects should wait.
The proposed spending:
>> $50 million to jump-start construction of a new cancer research tower at the University of Nebraska Medical Center in Omaha. That state money is projected to bring in an additional $320 million from private donors and hospital revenue.
>> $17 million for a new, larger facility for the College of Nursing on the University of Nebraska-Lincoln's East Campus.
>> $19 million for an addition to Bruner Hall of Science at the University of Nebraska at Kearney to expand the UNMC nursing program there.
>> $5 million in programming and design work for a new Veterinary Diagnostic Laboratory in Lincoln to prevent the lab, used by livestock producers, from losing accreditation and possibly closing.
No one testified against the four proposals, though Heineman has labeled the spending requests as "very bad timing."
The governor has said that it would be fiscally imprudent to take $91 million from the state's cash reserves, as NU proposes. His higher priority is winning approval of his $130 million-a-year tax cut package.
Supporters of the projects rejected Heineman's assessment.
Sen. Galen Hadley of Kearney said the state's cash reserve has historically averaged about 5.6 percent of total state revenue but will be at about 11 percent at the end of the two-year budget cycle in July 2013.
Even if lawmakers took out $91 million, the cash reserve would still be above the historic average, at about 8.5 percent, or $323 million.
"The time is right to pursue this initiative," said NU President J.B. Milliken. He emphasized that this was a "one-time" investment and not an ongoing expense.
Milliken drew an analogy to the array of financial incentives offered to lure private businesses to Nebraska. If those tax incentives were applied to the cancer project alone, he said, it would qualify for $81 million in sales tax credits, which is much more than the $50 million being requested from the state.
"This is the greatest return on investment that I've seen in the Legislature," he said, of the $320 million expected to be donated and raised if the state spends $50 million.
Milliken said the state's $25 million investment last year in the Innovation Campus in Lincoln has already resulted in about $80 million in planned development from the private sector.
He said the spending would address a trio of important university priorities:
>> The state's nursing shortage, which is predicted to reach 3,800 nurses by 2020, and the shortage of other health professionals such as physician assistants and physical therapists. A shortage of space meant that 400 qualified nursing applicants were turned away last year.
>> A longtime goal of attaining a comprehensive cancer center designation for UNMC. The project will improve research as well as treatment, increase research grants and create 1,200 new jobs.
>> The possible loss of accreditation of the Veterinary Diagnostic Laboratory in Lincoln. Livestock producers and state wildlife officials said the lab is critical in tracking and diagnosing diseases. It also provides essential testing for exports.
Lincoln Sen. Tony Fulton, a member of the Appropriations Committee who introduced the Lincoln nursing college bill, said he didn't think NU would get the full $91 million. But he said that all were worthy projects and that the committee needed "good reasons" to reject any of them.
The committee took no action on the university's requests following the all-afternoon hearing. Heidemann said major spending decisions would wait until after the State Economic Forecasting Board makes a new projection of state tax revenue on Feb. 24.
Contact the writer:
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