Budget Challenge Lies Ahead for Legislature

Details: 15 April 2011

The Nebraska Legislature has completed more than two-thirds of its regular session for 2011. The 60th legislative day of the 90-day session passed last week. Now the 70th day is in sight—probably April 29—as the next marker. It’s the day by which the Appropriations Committee must advance its budget package to the body of the whole.

This Legislature has a mandate to pass a state budget for the next biennium, which will run in two fiscal years from July 1 of this year through June 30 of 2013. The challenge is exacerbated by a projected gap of more than $940 million between current spending levels and forecasted revenue.

The process started when the Governor presented his budget recommendations in early January, on the seventh day of the session. The nine-member Appropriations Committee took over from that point and has been working diligently to have its package of recommendations ready to go by the 70th-day deadline.

The committee issued a preliminary spending plan several weeks ago. It totaled about $7 billion for the 24-month period and was $11.1 million higher than the Governor’s version. Reports are that more has been added since then.

Establishing a balanced budget is a complex process, especially when spending cuts of the depth dictated by the current fiscal situation are deemed necessary. It is a stressful process of balancing priorities and making difficult decisions. Both the Governor and the Appropriations have major roles, but ultimately the entire Legislature faces the obligation.

Revenue enhancements—call them tax increases if you must—could be used to fill the gap and even permit additional spending for the state’s many obligations and needs, such as the broad array of human and social services, education at all levels, corrections and roads. For instance, a modest bump in the state’s progressive income-tax rates could do a lot, if not everything, to resolve the $940-plus-million dilemma.

But tax increases are pretty much out of the question in the current situation. The Governor put his foot down on that idea from the onset. From an economic perspective, there is concern that tax increases would thwart recovery and growth. From a political perspective, there is concern that voter-taxpayers won’t react kindly to any tax increase.

Even a proposed hike in the tax on cigarettes (LB 436), with its added impact of promoting better health, has dim prospects. As a revenue measure, it could help maintain, if not improve, reimbursement rates for the health-care providers who step up to facilitate Nebraska’s medical-assistance program. The harsher reality is that some Medicaid provider rates are likely to be reduced further from actual costs.

The whole Legislature has already made, and will continue to make, public policy changes that result in cost savings. Already, lawmakers have constricted state aid to local governments. The Education Committee has once again taken charge of modifying the complex formula that provides state aid to public school districts, thereby reducing what otherwise would be a billion dollars of cost and re-distributing $822 million next year and $880 million the following year. There are other examples of responsive actions.

In the midst of the budget challenges, there was some encouraging news. On Feb. 25, the Economic Forecasting Advisory Board presented a better outlook for the upcoming biennium than it had projected the previous October. The Forecasting Board next meets April 28. Its updated outlook could ease some of the stress on the Legislature, or it could make it worse.

Lethal Injection Scrutiny

Sodium thiopental is a fast-acting sedative that is part of a three-drug cocktail used in numerous states to carry out the death penalty by lethal injection. It isn’t manufactured in the U.S. any more. So Nebraska and six other states have purchased it from foreign sources. Nebraska bought doses from a manufacturer in India.

In March, the federal Drug Enforcement Administration required Georgia, Kentucky and Tennessee to turn over their foreign-sourced supplies of sodium thiopental to the agency. It is investigating how the drug was obtained during a national shortage. Is Nebraska next?

One Nebraska lawyer has written to the U.S. Attorney General asking for an investigation of Nebraska’s importing of sodium thiopental. Another lawyer filed a motion with the Nebraska Supreme Court on March 24, challenging the constitutionality of the lethal-injection law and the way in which sodium thiopental was obtained.

And finally…….

When an estimated 350 people turned out recently to rally at the State Capitol in support of collective bargaining rights—a worthy cause—the Lincoln bureau of the Omaha World Herald covered it with a 10-paragraph story. Two weeks earlier, when a crowd nearly 10 times larger turned out at that same location to rally, under the banner of the Nebraska Federation of Catholic School parents, in support of parental rights to choose non-governmental schools for the education of their children, the Lincoln bureau of the World Herald ignored it. Go figure.