Nebraska state budget (2008-2009)
- 1 Impact of budget woes
- 2 Budget background
- 3 Ideas about why the crisis occurred
- 4 Proposed actions
- 5 Budget transparency
- 6 See also
- 7 External links
- 8 Additional reading
- 9 References
While it was not expected that Nebraska would face a budget deficit for fiscal year 2009, for fiscal year 2010 officials estimated that the state faced a $152 million budget gap. Gov. Dave Heineman believed Nebraska would come through the recession better than most states due to its economic diversity. Shane Osborn, State Treasurer of Nebraska, noted, "We have a single, nonpartisan body as the legislature, the Unicameral. We also have a habit of fiscal responsibility that's kept spending in check and taxes within reason -- and has helped sustain a modestly robust economy amid a severe national recession." In February 2009 Nebraska was the only state to see a decline in unemployment between the months of January and February 2009. Although most state officials were calling for a reduction in spending and more fiscal conservatism, the governor announced in his 2009 state of the state speech that taxes would not increase and education funding would continue. Additionally, Gov. Heineman noted that the state's services must be preserved along with the state's "Rainy Day Fund." “Our hard work during the past few years has better positioned us to weather the coming fiscal storm, but state government must tighten its belt just as Nebraska families and businesses are doing. Making difficult but wise decisions today will position our state to emerge stronger when the national economy improves, “ said Heineman.
Impact of budget woes
- See also: State budget issues, 2009-2010
- In February 2009 Nebraska was the only state to see a decline in unemployment between the months of January and February. According to the Nebraska Department of Labor, unemployment statewide dropped from 4.3 percent to 4.2 percent, the second lowest rate in the nation. Specifically, the Omaha area unemployment rate fell to 4.8 percent from 5.2 percent in January, and in Lincoln the rate dropped to 4.2 percent from 4.8 percent. In 2008, Nebraska's unemployment rate was 3 percent.
- Due to lagging state funding, the Game and Parks Commission proposed to reduce services at 28 state recreation areas.
- In late March 2009 college officials announced budget reductions in light of the declining economy. Chadron State College announced a budget cut of at least 5 percent. Wayne State and Peru State colleges announced that they too would make similar reductions. The cuts would come from Chadron College’s cash fund, which totaled about $24.9 million. That fund included money received from tuition payments as well as state appropriations, said college officials. Chadron State’s total budget was over $37 million.
- See also: Nebraska state budget
Nebraska operates on a biennium, covering two fiscal years at a time. A fiscal year begins on July 1 and ends on June 30 of the following year; however, the biennium begins July 1 of odd-numbered years. Each state agency submits budget recommendations along with prior spending and revenue data by September. In odd-numbered years the governor is required to submit a budget proposal by January 15, with the exception of the first year in office, at which time a governor may submit a proposal on or before February 1 to the legislature. Following a series of hearings and meetings the Nebraska Unicameral makes necessary amendments prior to returning the budget document to the governor. The governor has five days to sign, not sign, veto or use a line-item veto before the bill goes into effect. According to the state Constitution, 30 votes are required to override the veto.
The following table provides a history of Nebraska's expenditures and gross domestic product (GDP).
|Fiscal year||Expenditures (billions)||GDP (billions)|
- NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.
Ideas about why the crisis occurred
- In early April 2009 the state Department of Revenue reported that net tax revenue for March 2009 were approximately $18 million less than projected, an 8 percent decrease from predictions made earlier in the year.
- According to a report by the Department of Revenue, motor vehicle sales had dropped 9.2 percent in the state in January 2009 compared to January 2008.
- Net taxable sales in Nebraska dropped 0.8 percent in January 2009 compared to January 2008, a grand total loss of $519,993.95 in sales tax revenue.
- Some lawmakers were upset that as of April 2009 state officials didn't specify how they would spend the $32 million they requested to fix problems at the Beatrice State Developmental Center. "My concern is, it is not the norm to ask for $32 million and not tell the Appropriations Committee how you plan to spend it, “ said Sen. Steve Lathrop.
Governor Dave Heineman
Gov. Dave Heineman 2009 State of the State Address
Although not facing a deficit problem, the governor announced four priorities in regards to the looming FY 2010 budget gap: no tax increases, additional funding for K-12 and higher education, preserving services and maintaining a strong reserve fund. Specifically, Gov. Heineman proposed an additional $100 million in K-12 school funding and $16.8 million for special education programs. Education accounted for approximately 85 percent of the governor's spending plan, according to state officials. “We made the tough budget decisions two years ago necessary to control spending, but we must prepare our state for a slowing economy, “ Gov. Heineman said. “My budget anticipates no revenue growth in FY 2010 and we are working with state agencies to encourage each department to save money in the current fiscal year. State agencies that conserve funding now will be able to apply their savings toward next year’s budget. Encouraging agencies to ‘save it and keep it’ is a more business-like approach than the past practice of ‘spend it or lose it.’"
Current projections place the state's budget deficit at $374 million, and that was expected to worsen throughout the upcoming months. "We've already passed more (spending bills) than I think we're going to be able to fund, “ said the chairman, Sen. Lavon Heidemann. Heidemann said that lawmakers would be depending on the governor to veto spending bills should they be passed by the legislature. Sen. Tony Fulton warned that if planned spending exceeded revenue, that could trigger a tax increase. One of the spending measures proposed funding health-education centers that could cost $495,000 over the next two years. However, other lawmakers said that they would rather accept the measures and do some "pruning" later.
However, according to a recent report by the Platte Institute, Nebraska was overspending taxpayer dollars. By following its neighboring states' spending plans in five key areas (K-12 education, public welfare, highways and public safety), economist Ernie Goss said that Nebraska could save approximately $557 million.
Eliminate sales tax exemptions
In a period of time when states were struggling with tax revenue, some Nebraska lawmakers were asking the legislature to review exemptions in sales tax. "If we could eliminate all of the exemptions, we would eliminate property taxes, we would cut the motor vehicle taxes down, we could eliminate corporate taxes, “ said Sen. Rich Pahls. Sales tax revenue for the state totaled two million dollars a year; three billion was exempt.
Capitalize on wind energy
In reaction to not only the state's but also the nation's economy, most Nebraska lawmakers were looking towards wind energy for a new source of revenue. According to state officials, Nebraska had the 6th highest potential for generation of energy from wind. Sen. Chris Langemeier said that he hoped to see a state that gets revenue from excise taxes paid by users in other states on exported wind energy. The revenue, he said, would offset property taxes. "We’re taking a step forward, not a step back, “ said Sen. Ken Haar.
Economic stimulus package
Nebraska was expected to receive $1.2 billion from the $787 billion dollar economic stimulus. All told, the federal stimulus plan would create or save 23,000 jobs in Nebraska, based on White House estimates.
According to preliminary reports, Nebraska was expected to receive:
- $234 million in education stabilization funds
- $228 million for Medicaid
- $4 million for foster care and adoption
- $229 million for highway infrastructure
- $24 million in transit capital assistance
- $7 million towards transportation enhancement
- $20 million for clean water projects
- $20 million for drinking water
NebraskaSpending.com is the name of the publicly available website created by the Nebraska government. It discloses information about how the state spends taxpayer dollars, and includes data on agency expenditures and contracts. NebraskaSpending.com was created at the initiative of State Treasurer Shane Osborn in July 2007. Treasurer Osborn reported that to date, more than 600,000 users had visited nebraskaspending.com (in a state of 1.7 million people). The average site visitor spent 18 minutes on the site, according to Osborn.
Cost estimates for creating online transparency websites have varied widely from state to state. As Nebraska's Treasurer Osborn noted in his letter to Virginia's legislators, such estimates are sometimes erroneous and higher than they should be. According to Osborn, NebraskaSpending.com only cost $38,000, despite an initial $1.1 million cost estimate.
Treasurer Shane Osborn speaks about Nebraska's online spending site
NebraskaSpending.com also articulates Nebraska's openness to change and improvement to the site. The treasurer writes:
If we are to be truly successful in bringing more transparency to state government, it will have to be a collective effort. I encourage you to contact me with your thoughts and ideas as to how we can improve this site and make Nebraska the most efficient state government in the country!
The Taxpayer Transparency Act made spending transparency an official requirement for the state government.
NebraskaSpending.com provides a database of state financial information, which is searchable by criteria such as amounts spent, agency and vendors. The following table is helpful in evaluating the level of transparency provided by NebraskaSpending.com.
|State database||Searchability||Grants||Contracts||Line item expenditures||Dept./agency budgets||Public employee salary|
Economic stimulus transparency
- The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the nation. Of that $787 billion stimulus package, it was estimated that 69%, or over $541 billion, would be administered by state governments.
- Nebraska was expected to receive an estimated $871,442,210.
Support for creation of the database
NebraskaSpending.com was created at Treasurer Shane Osborn's direction. In Treasurer Osborn's words:
As State Treasurer, my office is responsible for the receipting and disbursing of all state funds, which includes accurately recording these transactions and informing the Legislature through a yearly report on the state's financial picture. Further, as a public servant, I believe elected officials have a duty to show the public how their tax dollars are being spent right down to the last penny.
Public employee salary information
- See also: Nebraska state government salary
- Nebraska Taxpayers for Freedom
- Platte Institute for Economic Research
- Nebraska Tax Research Council
- NebraskaSpending.com, official website
- Nebraska Office of the Treasurer
- Comprehensive Annual Financial Report
- Nebraska State Auditor
- Nebraska Department of Administrative Services, State Budget Division
- Nebraska Department of Revenue
- Nebraska Government spending
- Model transparency legislation from the American Legislative Exchange Council is available at this link.
- Video of Governor Dave Heineman's Interview on Nebraska Economic Conditions
- Wall Street Journal, Nebraska sets the standard on government accountability, March 14, 2009
- Gov. Dave Heineman, “2009 State of the state address, “ January 15,2009
- State of Nebraska, “Executive budget 2009-2011 biennium, “ January 15,2009
- Center on Budget and Policy Priorities, “State Budget Troubles Worsen, “ March 13,2009
- Wall Street Journal, "Nebraska Sets the Standard on Government Accountability," March 14, 2009
- Gov. Dave Heineman, “Gov. Heineman Urges Discipline to Help Weather Fiscal Storm, “ January 15,2009
- [Gov. Dave Heineman, “2009 State of the state address, “ January 15,2009
- Action 3 News, “Nebraska Only State to See Unemployment Rate Drop, “ March 26,2009
- Omaha World Herald, "State parks not immune to budget woes," March 12, 2009
- The Chadron Record, “5% budget cut looming at CSC, “ March 30,2009
- Nebraska Council of School Administrators, “Nebraska budget process, “ October 30,2008
- US Government Spending, “Nebraska State and Local spending, “ accessed April 8,2009
- Associated Press, “Neb. tax revenues fall below projections in March, “ April 10,2009
- Department of Revenue, “Comparison of January 2009 and January 2008 Motor Vehicle Sales, “ April 8,2009
- Department of Revenue, “COMPARISON OF JANUARY 2009 AND JANUARY 2008 NET TAXABLE SALES, “ April 8,2009
- Omaha World-Herald, “Nebraska chastised for failure to account for $32 million, “ April 7,2009
- Associated Press, “Key lawmaker asks Neb. senators to slow spending, “ April 8,2009
- KPTM, “Goss Offers Tips on how State Can Cut Back, “ March 25,2009
- Action 3 News, “Senator: End Property Taxes, “ April 1,2009
- Omaha World-Herald, “Study to look for ways to capitalize on Nebraska's wind, “ April 8,2009
- Omaha World Herald, “Prospect of $1.2 billion stimulates lots of ideas, “ March 27,2009
- American Recovery and Reinvestment Act, “Impact, “ accessed April 8,2009
- Nebraska Recovery Site, “State Fiscal Stabilization Fund - Education, “ accessed April 8,2009
- Nebraska Recovery Site, “Federal Medical Assistance Percentage, “ accessed April 8,2009
- Nebraska Recovery Site, “Transportation, “ accessed April 8,2009
- Nebraska Recovery Site, “Water, “ accessed April 8,2009
- National Taxpayers Union, "Taxpayer Group Applauds South Carolina Governor, Nebraska Treasurer for Putting State Spending Online, “ October 10, 2007
- Shane Osborn, "Letter to Virginia Legislators, “ January 27, 2009
- NebraskaSpending.com homepage
- National Taxpayers Union, "A Letter to the Nation's Governors: Ensure Transparency and Accountability by Posting Stimulus Expenditures Online, “ March 10, 2009
- Wall Street Journal, “Stimulus Spending by State, “ March 12,2009
- NebraskaSpending.com homepage