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Nebraska state budget


Nebraska
Biennial
Fiscal Year 2012-2013
Signed into law April 2, 2012
GF Revenue


The Nebraska state legislature passed the bills making up the $7.1 billion FY2013 state budget on March 27, 2012,[1] and Gov. Dave Heineman signed it into law on April 2, 2012, with no vetoes.[2]

Nebraska has a total state debt of approximately $7,805,175,000 when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. [3]

See also: The Nebraska State Budget on State Budget Solutions
2011 State spending & deficit in billions[4]
Total spending Health and human services Education Protection Other
$3.4 $1.2 $1.5 $0.15 $0.60
2011 Local spending & deficit in billions[5]
Total spending Pension Health care Education Welfare Protection Transport Deficit
$14.9 $0.20 $0.80 $3.6 $0.30 $0.9 $0.80 $13

[edit] FY2012-13 Biennial Budget

The state's $7.1 billion budget for FY2013 is contained in multiple bills before the legislature. The deficit spending bill is LB968 and the bill addressing fund transfer is LB969. The legislature approved the bills making up the $7.1 billion budget on March 27, 2012.[1] Gov. Dave Heineman signed the budget bills into law on April 2, 2012, with no vetoes.[6]

Budget bills

LB968 is the main budget bill. The legislature approved it with a vote of 45-2.[1][7]

LB131, the cash reserve bill, includes $80 million in capital construction, primarily for higher education projects. The legislature voted 43-2 in favor of passage.[1][8]

LB969 is the bill that permitted fund transfers, which the legislature passed with a vote of 43-3.[1][9]

The governor said he believed a highlight of the budget was $71 million included in the budget for a new University of Nebraska cancer research center.[6] It also increases state spending on child welfare and child care services and rolls back some cuts in Medicaid payments to health care providers.[6]

Tax relief

In Jan. 2012, Sen. Abbie Cornett introduced a tax relief plan contained in LB970 on behalf of the governor. The plan as originally proposed would cut $327 million in taxes by eliminating the inheritance tax and would lower individual and corporate income taxes.[10] The three-year plan would cost roughly $52 million for this budget period, eating up a large chunk of the $63 million that is available under the Appropriations Committee's tentative budget.[11]The governor said in his State of the State address that he planned to expand the brackets for middle-class residents.[12] In the legislature, however, the governor's tax cut proposal shrunk to one-third of its original size.[13]

[edit] FY2011-12 Budget

The state of Nebraska passed a biennial budget for FY 2011-2012 on May 11, 2011. The budget spends approximately $7 billion over the biennium and closes a budget gap that had been projected to be nearly $1 billion.[14]

In Feb. 2012, the Nebraska Economic Forecasting Advisory Board predicted that the state would have no additional tax money besides the nearly $52 million in additional revenue for FY2012, ending June 30, 2012, and roughly $62 million in FY2013 than it predicted in October 2012.[11]

The legislature passed a budget for FY 2011-2012 on May 11, 2011. The budget spends approximately $7 billion over the biennium and closes a budget gap that had been projected to be nearly $1 billion.[15] The budget does not raise taxes and it cuts state agency budgets. It also rewrites the school funding formula which will save $410 million over the biennium and leaves nearly $300 million in the state's cash reserves.[16] A General Fund Appropriations Summary prepared by the state for the 2011‐2013 Biennium can be found here.

Gov. Dave Heineman said he opposed dipping into the state's $325 million cash reserve fund to cover the budget gap.[17] The governor supports a bill that would eliminate state aid to local governments, saving $44 million a year.[18]

Lawmakers have said they plan to close the budget gap without tax increases.[19] Options on the table include transferring $270 million from the state's cash reserve fund and holding total state spending growth to about 1.5 percent to 2 percent for the two years.[19] The November spending estimates showed growth increase of 7.6 percent, down from the 10.4 percent growth of prior estimates.[19] The growth in spending decreased due to lower school aid calculations and a new contract with the largest state employees union that calls for a pay freeze next year and 2 percent raises in 2012-13.[19]

Federal funds account for approximately one-third of the state budget. This year, the state expects about $2.6 billion.[20]

[edit] Collective Bargaining and Public Employee Unions

Sen. John Nelson introduced LB664, which would abolish the Commission on Industrial Relations and prohibit the state from engaging in collective bargaining, and would save the state about $500,000 over two years.[21]

[edit] Budget Cuts

Nebraska lawmakers have been told that the fat has been cut and the next step is for legislative committees to identifying possible cuts totaling 10% of state general-fund appropriations for all agencies under their purview.[22] Nebraska Education Commissioner Roger Breed told the Legislature's Education Committee that there was no more fat to cut and that cutting 10% would mean eliminating programs.[22] The Health and Human Services Committee must identify possible cuts of $235 million that could be made over the next two-year budget cycle.[23] The Department of Health and Human Services oversees welfare and Medicaid, accounting for 35% of the state's general-fund budget, where as it used less than 31% of the state budget a decade ago.[23]

[edit] Pension Costs

The state may need to come up with more than $100 million for FY2012-13 budget for two of the state's retirement plans cover more than 74,500 school employees and retirees across the state and more than 850 state troopers.[24] The pension funding problem constitutes 15% of the estimated $751 million budget hole facing state senators and the governor.[24]

[edit] Budget transparency

NebraskaSpending.com is the name of the publicly available website created by the Nebraska government. It discloses information about how the state spends taxpayer dollars, and includes data on agency expenditures and contracts. NebraskaSpending.com was created at the initiative of State Treasurer Shane Osborn in July, 2007.[25] Treasurer Osborn reports that to date, more than 600,000 users have visited nebraskaspending.com (in a state of 1.7 million people). The average site visitor spends 18 minutes on the site, according to Osborn.

Cost estimates for creating online transparency websites have varied widely from state to state. As Nebraska's Treasurer Osborn notes in his letter to Virginia's legislators, such estimates are sometimes erroneous and higher than they should be. According to Osborn, nebraskaspending.com only cost $38,000, despite an initial $1.1 million cost estimate.[26]


Treasurer Shane Osborn speaks about Nebraska's online spending site
nebraskaspending.com also articulates Nebraska's openness to change and improvement to the site. The Treasurer writes:
If we are to be truly successful in bringing more transparency to state government, it will have to be a collective effort. I encourage you to contact me with your thoughts and ideas as to how we can improve this site and make Nebraska the most efficient state government in the country![27]
To act on this recommendation, contact the Office of the Treasurer with your suggestions and comments.

[edit] Government tools

NebraskaSpending.com provides a database of state financial information, which is searchable by criteria such as amounts spent, agency, and vendors. The following table is helpful in evaluating the level of transparency provided by Nebraska Spending:

Criteria for evaluating spending databases
State DatabaseSearchabilityGrantsContractsLine Item ExpendituresDept/Agency BudgetsPublic Employee Salary
Nebraska SpendingY
600px-Yes check.png
Y
600px-Yes check.png
Y
600px-Yes check.png
Y
600px-Yes check.png
Y
600px-Yes check.png
N
600px-Red x.png
See also: Evaluation of Nebraksa state website
  • The expenditures page contains both line item expenditures and grants.[28]
  • All open contracts with the state are posted.[29]

[edit] FY2010-11 Biennial Budget

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

A report to the Tax Rate Review Committee in July 2011 showed actual receipts for FY2010 were $62.7 million over what was forecast in April 2011 by the Nebraska Economic Forecast Advisory Board.[20]

In Dec. 2010, the National Conference of State Legislatures said that the state faced a midyear shortfall of $74 million, which represents 2.1% of the FY2011 state budget.[30]

In the first month of FY2011, Nebraska state tax revenues were 9.6% below projections in July 2010.[31] The state expects to receive as much as $59 million in federal funds for education, an amount that equates to about 1,000 teaching jobs in the state, and an additional $69 million for Medicaid.[32]

For FY 2010 Nebraska's General Fund saw a 2.9% reduction and a 5.3% increase in FY 2011 with a two year average of 1.1% per year. The General Fund will be $3.38 billion for FY 2010 and $3.56 billion for FY 2011. Total funds will be $8.4 billion for FY 2010 and $8.6 billion for FY 2011 compared to $8.2 billion for FY 2009.[33]

A $211.3 million unobligated ending balance at the end of the FY10/FY11 Biennial Budget was achieved by a combination of:[34]

  • Deficit and base reductions in several entitlement programs such as Medicaid and Homestead Exemption
  • Use of $554 million of the American Recovery and Reinvestment Act of 2009 (ARRA) funds
  • Use of $254 million of Cash Reserve Funds.

In addition to the state’s cash reserve fund and federal stimulus dollars, lawmakers also tapped other cash funds and most state agencies and aid programs were cut by 7%, while some were the object of more targeted cuts.[35] Heading into the next budget period beginning July 1, 2011, an estimated balance of about $320 million will be in the cash reserve fund.[35]

For the fiscal year beginning July 1, 2011, the revenue shortfall is 8% of state spending, or $679 million, which is twice the size of the one closed in a special budget-cutting session in November. The $679 million shortfall was calculated using five-year historical averages for tax revenue growth and under which revenue is projected to increase annually by 7.2%. Those averages may be overly optimistic in this tough economic climate and if tax revenues increase more slowly than anticipated, the budget deficit will only increase.[35]

Sales that are taxed bring in only about $1.7 billion to the state and cities, and Nebraska has 27 pages of tax exemptions, which is quite long when compared to neighboring states. Thus, lawmakers look at removing exemptions to bring in more revenue when the state budget is pinched, as they did to helped solve the state's fiscal crisis in 2002-03, and by early August 2010, the discussion of rescinding the exemptions fired up again. [36]

[edit] Budget Background

Nebraska operates on a biennium, covering two fiscal years at a time. The fiscal biennium began on July 1, 2009 and ends on June 30, 2011. Each state agency submits their budget recommendations along with prior spending and revenue data by September. In odd-numbered years the Governor is required to submit a budget proposal by January 15 with the exception in the first year of office a Governor may submit a proposal on or before February 15[37] to the Legislature. Following a series of hearings and meetings the Nebraska Unicameral make necessary amendments prior to returning the budget document to the Governor. The Governor has 5 days to sign, not sign, veto or use a line-item veto before the bill goes into effect. According to the state Constitution 30 votes are required to override the veto. [38]

A budget enacted for a fiscal year can be amended or changed up to the last day of that fiscal year. Deficit appropriations are changes made to the originally enacted appropriations. There are several chances to amend a biennial budget once it has been enacted. For example, the FY09-10 and FY10-11 biennial budget was enacted in the 2009 Session. Both years can be changed during the 2010 Session, even though at that time, the state will be nine months into FY09-10. The second year of the biennial budget (FY2010-11) can also be subject to change prospectively during the 2010 Session and again during the 2011 Session as a “deficit” during the fiscal year.[39]

[edit] Accounting Principles

The Nebraska Auditor of Public Accounts office is responsible for independent, accurate, and timely audits, evaluations, or investigations of the financial operations of Nebraska State and local governments. Mike Foley has been Auditor of Public Accounts since his election in November of 2006. The office of the Auditor of Public Accounts is one of six offices making up the executive branch of Nebraska State Government. Nebraska's audit reports are published online.[40]

The Institute for Truth in Accounting (IFTA) rates Nebraska “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Nebraska's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.[41] Nebraska's CAFRs are published online by the Nebraska Administrative Services Accounting Division.

Paul Carlson is State Accounting Administrator. State Accounting is a division of the Department of Administrative Services (DAS) and operates and maintains statewide financial systems. The division pre-audits agency transactions, issues statewide Comprehensive Annual Financial Reports (CAFR) and Budgetary Reports, and coordinates the long-term financing needs of the state. State Accounting also prepares the Statewide Cost Allocation Plan (SWCAP).[42]

Credit Rating Fitch Moody's S&P
Nebraska[43] NRAa3AAA

S&P raised Nebraska's credit rating from AA+ to AAA, in part because the state has sought structural balance rather than relying on nonrecurring actions to balance its budgets.[44]

[edit] Stimulus

Nebraska received $1.3 billion in federal funding from the American Recovery and Reinvestment Act of 2009.[45] The state also received approximately $122 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.[46]


[edit] Public Employees

According to 2008 Census data, the state of Nebraska and local governments in the state employed a total of 143,208 people.[47] Of those employees, 102,439 were full-time employees receiving a net pay of $376,569,618 per month and 40,769 were part-time employees paid $35,446,767 per month.[47] More than 55% of those employees, or 79,724 employees, were in education or higher education.[47]

The largest state employees union and the state agreed to a new contract that include a pay freeze for 2011 and 2 percent pay raises in 2012-13.[19]

[edit] See Also

[edit] External links

[edit] Additional reading

[edit] References

  1. 1.0 1.1 1.2 1.3 1.4 The Lincoln Journal Star "Budget bills sent to governor" March 27, 2012
  2. The Omaha World Herald "Governor goes along with budget bill" April 3, 2012
  3. State Budget Solutions “Report reveals aggregate state debt exceeds $4 trillion” Oct. 24, 2011
  4. State Budget Division, General Fund Appropriations Summary
  5. USA Spending, State Guesstimated* Government Spending
  6. 6.0 6.1 6.2 The Omaha World Herald "Governor goes along with budget bill" April 3, 2012
  7. Nebraska Legislature "LB968 - Provide for deficit appropriations"
  8. Nebraska Legislature "LB131 - Change provisions relating to the Cash Reserve Fund"
  9. Nebraska Legislature "LB969 - Provide for fund transfers and change provisions relating to various funds"
  10. The Lincoln Journal Star "Debate opens on governor's tax cut plan" Jan. 26, 2012
  11. 11.0 11.1 The Journal Star "Nebraska lawmakers turn to budget decisions" Feb. 27, 2012
  12. Businessweek "Governors Seeking Jobs Offer Tax Breaks as Budget Woes Ease" Jan. 31, 2012
  13. Sioux City Journal "Neb. lawmakers struggle to set budget priorities" March 25, 2012
  14. Businessweek "Nebraska lawmakers approve state budget bills" May 11, 2011
  15. Businessweek "Nebraska lawmakers approve state budget bills" May 11, 2011
  16. Businessweek "Nebraska lawmakers approve state budget bills" May 11, 2011
  17. Bloomberg "Neb. lawmakers face crippling 2-year budget crunch" Jan. 3, 2011
  18. The Wall Street Journal "Budget Battles Roil Straitened States" Feb. 25, 2011
  19. 19.0 19.1 19.2 19.3 19.4 The Omaha World-Herald "State budget gap shrinks" Nov. 16, 2010
  20. 20.0 20.1 The Lincoln Journal Star "Federal impasse could cast uncertainty on state's economy" July 28, 2011
  21. The Journal Star "Heineman weighs in on CIR, collective bargaining issues" Feb. 23, 2011
  22. 22.0 22.1 Yahoo! News "Nebraska lawmakers told no more fat to cut" Aug. 20, 2010
  23. 23.0 23.1 Businessweek "Neb. lawmakers eye massive department for cuts" Aug. 25, 2010
  24. 24.0 24.1 The Lincoln Journal Star "State’s retirement plans account for 15 percent of budget deficit" Aug. 14, 2010
  25. National Taxpayers Union, "Taxpayer Group Applauds South Carolina Governor, Nebraska Treasurer for Putting State Spending Online," October 10, 2007
  26. Shane Osborn, "Letter to Virginia Legislators," January 27, 2009
  27. NebraskaSpending.com homepage
  28. Expenditures, Nebraska Spending
  29. State Contracts, Nebraska Spending
  30. The Wall Street Journal “States Face Budget Shortfalls of $26.7 Billion“ Dec. 8, 2010
  31. Businessweek "Nebraska tax revenue misses mark in July" Aug. 10, 2010
  32. The Omaha World-Herald "Stimulus funds may not require action" August 7, 2010
  33. Nebraska Legislative Fiscal Office, "State of Nebraska Biennial Budget (2009 Session)," August 2009
  34. Nebraska Legislative Fiscal Office, "State of Nebraska Biennial Budget (2009 Session)," August 2009
  35. 35.0 35.1 35.2 "Monster budget gap awaits" Omaha World-Herald April 19, 2010
  36. "Lawmakers eye tax exemptions" August 8, 2010
  37. Nebraska Legislative Fiscal Office, "State of Nebraska Biennial Budget (2009 Session)," August 2009
  38. Nebraska Council of School Administrators,"Nebraska budget process," October 30,2008
  39. Nebraska Legislative Fiscal Office, "State of Nebraska Biennial Budget (2009 Session)," August 2009
  40. Nebraska Auditor of Public Accounts Web site, retrieved October 30, 2009
  41. Institute for Truth in Accounting, “The Truth About Balanced Budgets—A Fifty State Study,” Page 35
  42. Nebraska Accounting Division Web site, retrieved October 30, 2009
  43. State of Indiana, “State Credit Ratings-as of June 24, 2009"
  44. The Lincoln Journal Star "S&P raises state of Nebraska's rating to AAA" May 6, 2011
  45. Recovery, "Stimulus Spending by State"
  46. Federal Fund Information for States “ARRA FMAP Extension & Education Jobs Fund Totals” Aug. 11, 2010
  47. 47.0 47.1 47.2 2008 Nebraska Public Employment U.S. Census Data
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