TMCnet News
Nebraska legislators don't expect tax increase(Omaha World-Herald (NE) Via Acquire Media NewsEdge) Dec. 28--LINCOLN -- Nebraska lawmakers expect one issue to override all others when they gather at the State Capitol next month: how to deal with the state budget in a slumping economy. Entering the session that starts Jan. 7, the state faces a $377 million gap between expected tax revenue and projected expenses. That shortage is for the two-year budget that begins July 1. The budget hole could grow if national economic woes start taking a larger toll on the state's economy, leading to lower state tax receipts. Lawmakers said they have no appetite for raising taxes to help close the gap. Not one chose that option in a survey of state senators by The World-Herald. Instead, the largest number said they would combine belt-tightening measures with tapping the record-high cash reserve fund to balance the books. The cash reserve, sometimes called the "rainy day" fund, is projected to reach $573 million by June 30. The rainy day has arrived, said State Sen. Steve Lathrop of Omaha. "We don't keep the cash reserve around for the sake of keeping the cash reserve around," Lathrop said. Lawmakers will face plenty of other issues in the 90-day legislative session: child welfare, roads funding, taxes, water policy, illegal immigration, lethal injection. But the budget dominated lawmakers' concerns. It was named by 36 of the 40 lawmakers who responded to the survey. "Budget issues trump all other issues this year," said Sen.-elect Galen Hadley of Kearney. Nebraska's situation could be worse. Most states have had to cut their current budgets because of the economic downturn. Nebraska is one of only nine to have avoided that. Having a healthy cash reserve, which lawmakers built up and protected in recent years, will help. "We will have a challenge before us, there's no doubt, but I'm glad we're Nebraska," said State Sen. Lavon Heidemann of Elk Creek, chairman of the Appropriations Committee. Heidemann is among those who favor spending cuts and tapping the rainy day fund. The trick, he said, will be deciding how much of the cash reserve to use and for what purpose, so the fund does not run dry. Heidemann said it should be used sparingly for ongoing expenses. The budget also will make it difficult for lawmakers to tackle many of their personal interests, such as passing new tax cuts or putting money into new and expanded services for troubled children. "A lot of what we can or cannot accomplish is tied to state revenues," said Speaker of the Legislature Mike Flood of Norfolk. Senators could increase spending on their priorities if they are willing to take the money from elsewhere, Flood said. Heidemann said it doesn't appear it will be necessary to actually reduce state agency budgets below the current year's spending level. Instead, agencies may get small increases or none, and that could force changes in services as the state copes with rising costs. Much could change in the budget picture before the legislative session ends in early June. Tax revenue figures used in setting the budget will be reviewed by a state panel twice before then -- at the end of February and the end of April. The panel's forecasts will reflect the direction of the state's economy. Another factor will be the actions of the new administration in Washington. Among the possibilities under discussion are federal help with Medicaid expenses and an economic stimulus plan that includes money for roads and bridges. The expense side for Nebraska could grow, however, if the state loses federal Medicaid funding for the troubled Beatrice State Developmental Center or a court battle with Kansas about use of Republican River water. State retirement plans also are likely to require an infusion of money to stay solvent in the face of market losses. --Contact the writer: 402-473-9583, [email protected] To see more of the Omaha World-Herald, or to subscribe to the newspaper, go to http://www.omaha.com. Copyright (c) 2008, Omaha World-Herald, Neb. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |