Gov. Pete Ricketts proposes using a series of budget cuts, withholdings, and transfers to close a $267 million gap in the current fiscal year budget.
Ricketts insists the Unicameral must act quickly in the current fiscal year to lay a foundation for dealing with a projected $900 million to $1.2 billion revenue shortfall in the next two-year state budget cycle.
Among the cuts proposed by the governor is a 4% across-the-board cut to most agencies within his administration, totaling $42 million. Targeted cuts would total approximately $51 million. The governor’s plan would hold off seeking $77 ½ million in so-called re-appropriations. It would also recapture $21 ½ million in cash funds left unused.
Ricketts believes state government can absorb the cuts without harming vital services.
“I think that what that says is we do have the opportunity to be able to fund a lot of these essential services and do it in a way where we can control spending,” Ricketts tells Nebraska Radio Network in an interview. “And that’s important, because at the end of the day the only way we can have sustainable tax relief is by controlling spending.”
Ricketts has asked for $92 million from the cash reserve fund to deal with the current revenue shortfall. His budget office also projects the state will receive $11.2 million this fiscal year from Amazon’s decision to collect state sales tax on Internet purchases made by Nebraskans.
Ricketts says even with the cuts the state will maintain a three-percent reserve, plus $500 million of cash reserves, which he says will be adequate to meet any emergency which might arise.
“But it’s not something we want to do long term and that’s why it’s important that we cut the budget, get it back into balance, and my budget does that,” Ricketts states.
The governor does not have authority to cut the budget. Cuts must be approved by the legislature’s Appropriations Committee and, then, the full Unicameral to be enacted.
The proposal spares the public school system and the state prison system from budget cuts. Higher education would receive only a 2.3% cut. It also proposes adding an additional $20 million to Child and Family Services.
Recommended adjustments actually total $276 million, a bit more than the current revenue shortfall.
State revenues have declined of late in Nebraska as the state agriculture economy has suffered from dropping commodity prices. Receipts during the last fiscal year fell $95 million below the forecast. The forecast was revised downward in October.
Legislative Bills 22, 23, and 24 carry the governor’s proposals. Ricketts says he would like the Appropriations Committee to move them to the floor for debate the first week of February.
Click here for a guide to the Governor’s budget adjustments for FY 2016-2017.
Ricketts unveils his plan for the coming biennium budget during his State of the State address to the Unicameral next week.
AUDIO: Brent Martin reports [:45]