Balanced state budget depends on federal deficit

Wednesday, March 22, 2017

Skepticism is always in order when political leaders talk budgets, and that includes every level of government.

It’s common for officials to brag about not raising a tax levy, for instance, without noting that increasing assessed values are bringing in additional tax money.

Nebraska officials are quick to note that they achieve a balanced state budget, as required by law, without noting that it’s balanced with the help of federal funding that is available only because of deficit spending that adds to the national debt.

In Nebraska, federal funding amounts to 30 percent of the state budget.

Legislative Bill 611 seeks to shed light on that situation, by requiring agencies to inventory the strings attached to receiving federal funds.

They’re already required to have information on hand about the funds they receive, but they’re not required to aggregate the information in a report easily accessible to legislators and the public.

“Federal funding incentives often cause the state to engage in programs or projects it might otherwise choose to avoid,” said Sarah Curry, policy director for the fiscally conservative Platte Institute.

“LB611 would require agencies to create contingency plans in the event these funds were cut. At nearly $20 trillion in national debt, federal spending priorities can change at any time and will change inevitably, without Nebraska’s best interests in mind. State lawmakers need to be prepared for this reality,” she said.

LB611 is a small part of a legislative session dealing with large issues such as a $900 million budget shortfall and Gov. Ricketts’ proposal to change the way agricultural land is taxed.

But it is the type of bill that can change for the better the way we look at the total picture of taxation and government spending.

Respond to this story

Posting a comment requires free registration: