Shoring up revenue, balancing the budget

The Legislature finished the First Special Session 2009 last Friday making the adjustments needed to shore up revenue declines and balance the budget. Many of you were watching closely to the changes being proposed and contacted my office with concerns and suggestions, I appreciated hearing from you. However, for those of you who were not able to follow what was going on I would like to give you some highlights.

This special session was not as divisive as it could have been, and I believe that was due to a very sensible proposal by the Appropriations Committee.

The projected shortfall in the current two-year budget was estimated at $334 million. The Legislature's final budget adjustment was $337 million without dipping into more cash reserve funds. Out of the 16 bills introduced, only Legislative Bills 1 through 5 passed, with a few provisions taken from the other bills. The Legislature appropriated $110,651 for the cost of the 12-day special session in LB4.

LB5 made changes to the school aid formula; potential savings to the state budget $31.5 million. The cost of growth for school district's allowed operating expenses was reduced by lowering the limitation rate used to calculate school district budget authority in the "cost growth factor," from 1.5 percent to .25 percent. The bill also decreased allocated income tax funds to non-equalized districts by $20 million for 2010-11. Qualification for the elementary site allowance was clarified affecting some elementary sites. Clarification of the instructional time allowance was not addressed in the bill, and postponed until the Department of Education could provide additional information to the Education Committee. Finally, LB5 changed the teacher education adjustment - for districts with teachers with advanced teaching degrees - to an allowance. The adjustment was averaged into per-student spending, where changing it to an allowance is estimated to save funds by addressing it school by school.

LB1 allowed for the across-the-board appropriation cuts of 2.5 percent in FY 2009-10, and 5 percent in FY 2010-11, with some exceptions like Corrections, Special Education, Homestead Exemption, Beatrice State Developmental Center, 24-hour care facilities, protection and safety programs, Medicaid, and services for individuals on the developmental disabilities waiting list. Some specific unexpended funds and cuts were found in many of these programs.

The Legislature rolled back future legislative staff pay increases and senator per diems. Appropriations committee changed the Governor's proposed cuts to the courts from 2.5 percent FY 2009-10 to 1.5 percent, and FY 2010-11 from 5 percent to 3 percent. This was to protect potential loss of services and the closure of county courts especially in rural Nebraska.

In addition, I was glad there was a consensus among the body to eliminate the proposed raid of $1.2 million of commodity check-off funds. Those should be off limits.

LB2 created and did away with many transfers between funds to help the bottom line. A couple of such transfers were $10 million from the Education Innovation Fund to the University Cash Fund, or $1 million from the Capital Construction Fund to the General Fund.

LB3 gave authorization to transfers along with some additional amendments. One of those amendments was to reduce the $5 million to be transfer out of the Enhanced 911 Fund to $3.4 million to protect its principal for the funds original purpose after an Attorney General opinion. Another amendment increased the transfer out of the Economic Development's job-training fund from $3 million to $5 million because it was learned that the increase would not jeopardize the program.

Over all, I believe this was responsible adjustment to the budget. We were able to protect our cash reserve and prepare for the next two-year budget cycle.

If you have comments, questions, or concerns, please do not hesitate to contact me at mchristensen@leg.ne.gov or (402) 471-2805. In addition, you can also access the Nebraska Legislature's Unicameral Update Web site at http://unicameralupdate.blogspot.com/ for more detailed information.