Tax report spurs talk of more budget cuts; craft breweries win a round


May 11th, 2017

Sen. Tyson Larson advocates for liquor bill (Photo by Fred Knapp, NET News)

More bad financial news Wednesday raised the prospect of further state budget cuts, as senators continued to argue about state finances. Meanwhile, craft brewers won at least a temporary victory in their battle with larger beer companies.

One day after senators voted final passage for a package of budget bills, the Department of Revenue reported net tax collections in April were $55 million less than projections. But those were old projections, made before the state’s forecasting board lowered them last month. The board reduced its estimate by $55 million for the current and next two fiscal years. Wednesday’s report said net receipts were off $55 million for one month alone.

Gov. Pete Ricketts, who has criticized senators for not making more budget cuts, immediately issued a statement saying “I will be reviewing the budget in the coming days, and will take appropriate action on the bills in light of this revenue shortfall.” The governor’s line item veto authority gives him the power to reduce specific appropriations. Sen. John Stinner, chairman of the Appropriations Committee, said the board had taken April receipts into account in making its forecast, and he believes the budget as approved would balance out over the next two years.

Meanwhile, senators who voted against one bill in the budget package Tuesday fought back against the suggestion that if they had succeeded, state government would have shut down. That suggestion was made Tuesday by Stinner.

“If you wanted to shut this government down, those folks that didn’t vote for this, I want you to stand up in front of the Capitol and tell every employee – 13,000 of them – why they’re not going to get paid. Then you go home. Tell your schools. Tell your nursing homes. Tell your DD (developmentally disabilities) people they’re not going to get a check. They’ll think you’re really a responsible group because all you want to do is cut,” Stinner said.

Sen. John Kuehn led the pushback to that charge Wednesday. Kuehn said the bill Stinner was referring to was one making transfers between various state government funds.

“It did not fund state agencies, it did not provide the salaries for state employees, it did not appropriate TEEOSA (school) aid, or any of the disaster-vision, disastrous consequences that were advocated on this floor and reported in the media,” Kuehn said.

Stinner replied that the budget has to be looked at as a package containing several bills, and he was reacting to a vote against one of them.

“I had no idea what the next amendment, the next idea was going to come up. But I wanted to get everybody’s attention on the serious nature of what we were doing. The budget’s a puzzle – has a lot of moving parts. I don’t need to defend myself, my actions. I did what I thought was right,” he said.

Ricketts has until midnight Monday to make any budget vetoes, which the Legislature can then consider overriding. Areas he has previously pointed to for possible further cuts include the University of Nebraska, water sustainability projects, and rates paid to Medicaid providers such as nursing homes.

Also Wednesday, lawmakers debated a law affecting Nebraska’s craft beer breweries. Previously, they were exempt from a requirement that beer had to go to a distributor’s warehouse before being distributed. But according to Sen. Tyson Larson, that left Nebraska vulnerable to a lawsuit by big out-of-state brewers arguing the state was discriminating against interstate commerce. The Liquor Control Commission voted recently to end the exemption for craft brewers, and Larson wants to make the law mirror that new rule, to give it more legal strength.

Sen. Carol Blood of Omaha offered an amendment to say distributors have to take possession of the beer, but not take it back to their warehouse before distributing it. Sen. Ernie Chambers, supporting Blood’s amendment, said most people had already made up their minds. Chambers offered a musical diversion, singing “One hundred bottles of beer on the wall,” taking it down to 95 before relenting.

Meanswhile, other supporters of the amendment, like Sen. John Lowe of Kearney, argued Blood’s amendment would save money and time.

“Out in western Nebraska where a lot of these breweries are – they don’t want to have to deliver it off to Omaha, Lincoln, even Grand Island, to have it come back to be delivered to you across the street from where they’re at. Freshness is important in beer,” Lowe said.

Sen. Burke Harr, who didn’t support the amendment, said it challenged the state’s longstanding division of responsibilities between manufacturers, distributors, and retailers.

“If you’re in Ord, and you have to take your beer, deliver it to Grand Island, and then take it to Greeley, that’s an expense. I get that. But you know that upfront. It’s not as though this is something new that we’ve never seen before. This was the agreement we made when we said we’re going to legalize the sale and consumption of alcohol,” Harr said.

Senators adopted Blood’s amendment on a vote of 30-4, then gave the bill first round approval. Harr said that could leave the state in a legal gray area, with state law not as clear as the Liquor Control Commission’s rule.

And on another subject, Wednesday evening, senators gave second-round approval to a bill affecting teachers’ retirement. For future hires, it would raise the age to get full retirement benefits from 55 to 60. Proposals to require teachers wait a certain amount of time after retiring before they could substitute were dropped from the bill, and will be studied over the summer.

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