Governor’s budget proposal sees few changes

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February 21st, 2011

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Lincoln, NE – The Legislature will likely approve most of the deep cuts Gov. Dave Heineman has proposed for the state budget, but the debate is not over yet.

How do you make a projected budget gap of nearly $1 billion over the next two years disappear? First, you change your assumptions. The Appropriations Committee’s preliminary budget stops assuming the school aid formula will remain the same, and the state will make up for the loss of federal stimulus funds. That “saves” nearly $400 million, although it leaves schools to deal with the results.

You also use more than $250 million from the cash reserve. And you make a series of other adjustments in everything from Medicaid to state aid to cities, counties, and natural resources districts. That’s what the Appropriations Committee has done, and its chairman, Senator LaVon Heidemann, expects that’s close to how things will turn out.

Appripriations Committee Chairman Senator LaVon Heidemann says small changes to the governor's budget proposal are likely. (Photo courtesy Nebraska Legislature)

“I don’t think you’re going to see major changes,” Heidemann said. “You might see some minor changes as we go through the public hearing process. We’re going to learn what our proposal will do to everything, and they’re going to voice their concerns. We might have some tweaks here and there, but we don’t have the room to wander too far.”

The committee’s preliminary budget already contains some tweaks, compared to what the governor proposed. It would cut payments to Medicaid providers 4%, instead of 5%. That cut could be eliminated entirely if the Legislature approves a proposed cigarette tax increase. That proposed tax increase could also affect whether or not lawmakers feel they can set aside more money for roads, beginning two years from now.

One thing the committee and the governor agree on is appropriating $25 million to begin construction on the University of Nebraska-Lincoln’s innovation campus, on the old State Fair grounds. The committee is also recommending about $6 million more than the governor in state aid to schools over the next two years. That’s still tens of millions short of what Education Committee Chairman Sen. Greg Adams would like to see for school aid. The amount budgeted could go higher, if the state’s revenue forecast improves. That forecast is due to be revised Friday, and again in late April, before final budget decisions are made.

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