The governor and the legislature agree for the most part on the state budget, with the exception on just how much needs to be tucked away for a rainy day.
Legislators are poised to give approval to proposed changes to the $8.6 billion two-year state budget they approved last year.
Those changes indicate general agreement with Gov. Pete Ricketts on some state capital needs. Preliminary approval has been given to taking money from cash reserves to create a $50 million infrastructure fund, spending $27 million to expand prison space, and using nearly $14 million to upgrade the Missouri River levee protecting Offutt Air Force Base near Omaha.
The governor, though, believes the state doesn’t need more than $700 million in cash reserves.
“Well, I think that it’s no secret that I think our cash reserve is too high,” Ricketts says. “Those represent taxpayer dollars. But I’m absolutely willing to work with the Appropriations Committee on what that right level is.”
If the Unicameral gives final approval to the state budget, it will reduce the cash reserves by approximately $90 million.
Still, Gov. Ricketts believes the state could safely dip a little deeper into cash reserves. He says he would be comfortable with a rainy day fund totaling around $500 million.
That would make Sen. Heath Mello, chairman of the Appropriations Committee, a bit uncomfortable.
“To some extent, I’ve taken maybe a bit of a more conservative approach of looking at the state’s rainy day fund,” Mello tells Nebraska Radio Network.
Mello explains his comfort level comes from the Legislative Fiscal Office which preaches that the state cash reserves should total approximately 16% of state revenue, arguing that that would keep state government stable even if Nebraska experiences a 4% decline in state revenues for four successive years.
In other words, a 16% cash reserve fund should be adequate to weather a recession.
“And I think there’s some science behind it,” Mello says. “It’s not simply a number that we’ve simply thrown out there and this is where we want to be at.”
AUDIO: Brent Martin reports [:50]