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Nebraska state budget

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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

• See past state budgets

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

• See sample transparency legislation at the Sunshine Standard

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]

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 Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
Nebraska Spending	Y	Y	Y	Y	Y	N

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

Main article: Nebraska government 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]	NR	Aa3	AAA

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

Main article: Nebraska public employee salaries

Main article: Nebraska public pensions

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

• Nebraska taxpayer-funded lobbying
• Nebraska public pensions

[edit] External links

[edit] Additional reading

[edit] References

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