Nebraska governor gives final approval to massive package of budget cuts totaling $334 million

Nebraska governor signs budget-cutting package

LINCOLN, Neb. — Nebraska Gov. Dave Heineman signed into law $334 million in budget reductions on Friday, after lawmakers overwhelmingly approved the cuts during an emergency session in which there was little disagreement over how to close the largest budget gap in recent memory.

The plan hinges on across-the-board cuts to most state-agency budgets of 2.5 percent this fiscal year and 5 percent next year, although the details of what gets cut was left up to the individual agencies. State officials, lawmakers, and rank-and-file state employees may not know until January, when agencies will report on how they plan to slash spending.

During hearings on the budget-cutting plan, several state-agency officials said it was too early to say what the effects of the cuts might be. But if agencies rely heavily on layoffs, as many as 400 of state government’s roughly 18,600 employees people could lose their jobs.

“I don’t know if this is the easy way out,” Sen. Arnie Stuthman of Platte Center said shortly after lawmakers voted 47-0 on the budget bills. “I think it’s fair that we do it this way, but I’m concerned there are certain agencies that are in crisis already and this will make it worse.”

One worry is that it could increase the burden on front-line social workers already struggling to keep up with growing demand for welfare-related services such as food stamps in the down economy.

Heineman emphasized that the package contains no tax increases.

“We are addressing Nebraska’s revenue shortfall by reducing spending, not increasing taxes,” he said.

Some lawmakers, however, worry that a part of the budget-cutting package that will give K-12 public school districts a total of $34 million less next year than they planned on getting could cause locally set property taxes to increase.

Overall, the plan approved on Friday had few changes from the package Heineman handed lawmakers at the beginning of the special legislative session early this month. There was little debate on the bills on the floor of the Legislature and the special session was several days shorter than some legislative observers thought it might be.

“It is not realistic to think we can do the intense amount of work and careful preparation needed to make major budget changes in the scope of any special session,” Sen. Annette Dubas of Fullerton said in a letter to constituents.

The session was called after consecutive months where state tax revenue fell well below official projections that form the baseline for the budget passed last spring. A recent report showed that revenues rebounded some in October.

But some are already preparing for more budget cuts during the regular legislative session that begins in January.

“Considering the circumstances we find ourselves in, this was the proper approach,” Sen. Scott Lautenbaugh of Omaha said after the budget-cutting bills were approved. “Next session, we may have to look at a more targeted approach,” to cutting the budget. Heineman, a Republican, said there’s “no question” that there will be state economic challenges next year.

While not nixing any components of the budget bills on Friday, Heineman outlined three areas he wants senators to revisit during the regular legislative session: Putting some money lost to budget cuts back in a large fund that helps businesses train workers; and cutting state courts and the Legislature at the same level state agencies were.

Lawmakers reduced the budgets of courts by 1.5 percent this year and 3 percent next year, instead of the 2.5 percent and 5 percent cuts Heineman recommended. Courts’ officials had told lawmakers that following Heineman’s recommendation could lead to the shutdown of nearly two dozen courthouses.

The legislative branch will see its budget reduced by the same percentages Heineman recommended, but lawmakers kept $1 million in the budget that Heineman wanted to use to close the $334 million gap.

State senators and fiscal analysts have defended the move by saying it was needed to avoid layoffs and that the legislative branch historically has relied on so-called carry-over money from previous years.