Budget debate starts today

Full debate on the Appropriations Committee budget proposal will get underway on the Legislative floor on Tuesday.

The $8.8 billion budget retains the governor’s proposed 2 percent across-the-board reductions in FY17-18 but differs in other ways from the governor’s budget proposal.

For example, the committee’s budget reduces the governor’s proposed 4 percent across-the-board agency funding cuts to 2 percent in FY18-19 and reduces cuts to higher education funding to 1 percent in FY18-19.

The Appropriations Committee budget largely retains the governor’s proposal to reduce reappropriated funds by 4 percent but made several changes to various reappropriations.

Similar to the governor’s proposal, the Appropriations Committee budget uses cash fund transfers to help close the budget shortfall, amounting to $14.7 million in transfers. The committee also reduces the general fund transfer to the Water Sustainability Fund by almost $5 million for the biennium.

The committee’s budget proposal calls for a $100 million transfer from the cash reserve in the current fiscal year to help balance the budget, leaving the state’s cash reserve balance at $296 million at the end of FY18-19, which is about 6.6 percent of general fund receipts.

The committee’s budget would leave $582,955 to be used to enact new legislation for FY18-19. The Appropriations Committee budget proposal notes that any additional funds available for A bills or revenue reduction bills would have to be financed by further drawing down the Cash Reserve Fund balance.

The committee’s proposal also assumes revenue growth in the next budget cycle would average about 6.4 percent per year and leave about $98 million available for use by the next Legislature. OpenSky is concerned that this projection could be overly optimistic considering growth for the past few years has been significantly lower than that, including projected growth of 3.8 percent in FY17-18 and 4.4 percent in FY18-19. Uncertainty regarding the impact of federal tax changes also contributes to our concerns about this projection.

Debate on the budget begins at 9 a.m. and could extend into the evening as Tuesday has been designated as a legislative “late night” by the Speaker of the Legislature. NET Nebraska will stream the debate live.