Nebraska state budget (2008-2009)

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Nebraska may not be facing a budget deficit for fiscal year 2009 but for fiscal year 2010 officials estimate that the state is facing a $152 million budget gap.^[1] Governor Dave Heineman believes Nebraska will come through the recession better compared with most states due to its economic diversity. Shane Osborn, State Treasurer of Nebraska, notes "We have a single, nonpartisan body as the legislature, the Unicameral. We also have a habit of fiscal responsibility that's kept spending in check and taxes within reason -- and has helped sustain a modestly robust economy amid a severe national recession."^[2] In February 2009 Nebraska was the only state to see a decline in unemployment between the months of January and February 2009. Although most state officials are calling for a reduction in spending and more fiscal conservatism the Governor announced in his 2009 State of the state speech that taxes will not increase and education funding will continue. Additionally Gov. Heineman noted that the state's services must be preserved along with the state's "Rainy Day Fund." “Our hard work during the past few years has better positioned us to weather the coming fiscal storm, but state government must tighten its belt just as Nebraska families and businesses are doing. Making difficult but wise decisions today will position our state to emerge stronger when the national economy improves,” said Heineman.^{[3] [4]}

[edit] Impact of budget woes

See State budget issues, 2009-2010

• In February 2009 Nebraska was the only state to see a decline in unemployment between the months of January and February. According to the Nebraska Department of Labor, unemployment statewide dropped from 4.3 percent to 4.2 percent, the second lowest rate in the nation. Specifically the Omaha area fell to 4.8 percent from 5.2 percent in January and in Lincoln the rate dropped to 4.2 percent from 4.8 percent. In 2008 Nebraska's unemployment rate was 3 percent.^[5]
• Due to lagging state funding, the Game and Parks Commission proposed to reduce services at 28 state recreation areas.^[6]
• In late March 2009 college officials announced budget reductions in light of the declining economy. Chadron State College announced a budget cut of at least 5 percent. Wayne State and Peru State colleges announced that they too would make similar reductions. The cuts will come from Chadron College’s cash fund, which currently totals about $24.9 million. That fund includes money received from tuition payments as well as state appropriations, said college officials. Chadron State’s total budget is over $37 million. ^[7]

[edit] Budget background

Nebraska operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year, however the biennium begins July 1 of odd-numbered years. 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 1 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. ^[8]

[edit] Budget figures

The following table provides a history of Nebraska's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$10.8 [9]	$55.5 [9]
2001	$11.6 [9]	$57.4 [9]
2002	$12.5 [9]	$59.9 [9]
2003	$13.3 [9]	$64.6 [9]
2004	$14.1 [9]	$68.4 [9]
2005	$14.3 [9]	$71.2 [9]
2006	$15.3 [9]	$75.3 [9]
2007	$16.3 [9]	$80.1 [9]
2008	$17.4 [9]	$85.2 [9]
2009	$18.6* [9]	$90.6* [9]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

[edit] Ideas about why the crisis exists

• In early April 2009 the state Department of Revenue reported that net tax revenue for March 2009 was approximately $18 million less than projected, an 8 percent decrease from predictions made earlier in the year. ^[10]
• According to a report by the Department of Revenue motor vehicle sales have dropped 9.2 percent in the state in January 2009 compared to January 2008. ^[11]
• Net taxable sales in Nebraska dropped 0.8 percent in January 2009 compared to January 2008. A grand total loss of $519,993.95 in sales tax revenue. ^[12]
• The state of Nebraska has approximately $3 billion worth of sales tax exemptions compared to $2 billion a year that are generated in sales. Nebraska began levying a sales tax, and an income tax, after voters approved a constitutional amendment that took away state government’s authority to tax property. ^[13]
• Some lawmakers are upset that as of April 2009 state officials didn't specify how they would spend the $32 million they requested to fix problems at the Beatrice State Developmental Center. "My concern is, it is not the norm to ask for $32 million and not tell the Appropriations Committee how you plan to spend it," said Sen. Steve Lathrop. ^[14]

[edit] Proposed actions

[edit] Governor Dave Heineman

Although not facing a current deficit problem Governor announced four priorities in regards to the looming FY 2010 budget gap: no tax increases, additional funding for K-12 and higher education, preserving services and maintaining a strong reserve fund. Specifically Gov. Heineman proposed an additional $100 million in K-12 school funding and $16.8 million for special education programs. Education accounts for approximately 85 percent of the Governor's spending plan, according to state officials. “We made the tough budget decisions two years ago necessary to control spending, but we must prepare our state for a slowing economy,” Gov. Heineman said. “My budget anticipates no revenue growth in FY 2010 and we are working with state agencies to encourage each department to save money in the current fiscal year. State agencies that conserve funding now will be able to apply their savings toward next year’s budget. Encouraging agencies to ‘save it and keep it’ is a more business-like approach than the past practice of ‘spend it or lose it.’" ^[3]

[edit] Reduce spending

Current projections place the state's budget deficit at $374 million and is expected to worsen throughout the upcoming months. "We've already passed more (spending bills) than I think we're going to be able to fund," said the chairman, Sen. Lavon Heidemann. Heidemann said that lawmakers will be depending on the Governor to veto spending bills should they be passed by the Legislator. Sen. Tony Fulton warned that if planned spending exceeds revenue, that could trigger a tax increase. One of the current spending measures proposes funding health-education centers that could cost $495,000 over the next two years. However, other lawmakers said that they rather accept the measures now and do some "pruning" later. ^[15]
However, according to a recent report by the Platte Institute, Nebraska is overspending taxpayer dollars. By following it's neighboring state's spending plans in five key areas (k-12 education, public welfare, highways and public safety) economist Ernie Goss said that Nebraska could save approximately $557 million. ^[16]

[edit] Eliminate sales tax exemptions

In a period of time when state's are struggling with tax revenue some Nebraska lawmakers are asking the Legislature to review exemptions in sales tax. "If we could eliminate all of the exemptions we would eliminate property taxes, we would cut the motor vehicle taxes down, we could eliminate corporate taxes," said Sen. Rich Pahls. Currently sales tax revenue for the state totals two million dollars a year, three billion is exempt. ^[17]

[edit] Capitalize on wind energy

In reaction to not only the state's but also the national economy most Nebraska lawmakers are looking towards wind energy for a new source of revenue. According to state officials Nebraska has the 6th highest potential for generation of energy from wind. Sen. Chris Langemeier said that he hopes to see a state that gets revenue from excise taxes paid by users in other states on exported wind energy. The revenue, he said, would offset property taxes. "We’re taking a step forward, not a step back," said Sen. Ken Haar. ^[18]

[edit] Economic Stimulus Package

Nebraska is expected to receive $1.2 billion from the $787 billion dollar economic stimulus.^[19] All told, the federal stimulus plan would create or save 23,000 jobs in Nebraska, based on White House estimates. ^[20]
For more information on how the federal stimulus funds are being used in the state of Nebraska, visit the state recovery website.

According to preliminary reports Nebraska is expected to receive:

• $234 million in education stabilization funds ^[21]
• $228 million for Medicaid ^[22]
• $4 million for foster care and adoption ^[22]
• $229 million for highway infrastructure ^[23]
• $24 million in transit capital assistance ^[23]
• $7 million towards transportation enhancement ^[23]
• $20 million for clean water projects ^[24]
• $20 million for drinking water ^[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]

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] News

Transparency Study done by Nebraska Taxpayers for Freedom.

[edit] Legislation

The Taxpayer Transparency Act makes spending transparency an official requirement for the state government.

[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 NebraskaSpending.com:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
NebraskaSpending.com

[edit] Economic Stimulus Transparency

• The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[28]
• Nebraska will receive an estimated $871,442,210 ^[29]
• The economic recovery website to show how legislators and government officials in Nebraska are spending Federal funds is available here.

[edit] Support for creation of the database

NebraskaSpending.com was created at Treasurer Shane Osborn's direction. In Treasurer Osborn's words,

As State Treasurer, my office is responsible for the receipting and disbursing of all state funds, which includes accurately recording these transactions and informing the Legislature through a yearly report on the state's financial picture. Further, as a public servant, I believe elected officials have a duty to show the public how their tax dollars are being spent right down to the last penny.^[30]

[edit] Public employee salary information

Although NebraskaSpending.com does not yet have the capacity for users to search for the salaries of specific employees, this page, from the Nebraska Library Commission, provides statistics about state employee salaries.

[edit] See Also

Nebraska taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• Wall Street Journal, Nebraska sets the standard on government accountability, March 14, 2009
• Gov. Dave Heineman,"2009 State of the state address," January 15,2009
• State of Nebraska,"Executive budget 2009-2011 biennium," January 15,2009

[edit] References

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