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Dist. 40 Report
The Legislature gave first-round approval last week to a $10.8 billion biennial budget for fiscal years 2025-2026.
It consisted of five bills advanced to the floor by the Appropriations Committee. Going into debate, senators faced a nearly $262 million projected budget deficit over the next two years due to federal rate changes for Medicaid and a late report by the Economic Forecasting Advisory Board. In developing the budget proposal, the Appropriations Committee had used February’s numbers from the Forecasting Board. That projection was much more favorable than what the Board came up with last month shortly before debate began on the budget.
During debate, senators did adopt several amendments to the budget. One amendment would correct a problem identified by the State Auditor’s Office which found the Nebraska Department of Education paid some schools more than the 80% reimbursement rate for special education expenses authorized by statute. That rate was established when the Legislature passed LB583 two years ago.
Another adopted amendment further cut state agencies by over $100 million and transferred $132 million from the state’s “rainy day” cash reserve fund to shore up the state’s general fund. Fiscal experts have recommended that the cash reserve should be around 16%, which gives the state some cushion in case of an economic recession or budget shortfall. This amendment will bring the cash reserve fund from $821 million to about $690 million by the end of the biennium, or about 12% of the state’s expenses.
Despite these cuts, the amended budget included the preservation of $55 million for the projects proposed by the Legislature’s Statewide Tourism and Recreational Water Access and Resource Sustainability (STAR WARS) Special Committee.
The STAR WARS Committee was created in 2021 and was tasked with studying strategies to secure Nebraska’s future water supply and strengthen Nebraska’s flood control infrastructure, while also enhancing economic and recreational opportunities. The biennial 2025-2027 budget would preserve about $37 million to complete the marina construction project at the Lewis and Clark State Recreation Area. Another $18 million would be allocated to Lake McCaughey. Any remaining money could be made available for Niobrara State Park once the projects at these two sites are completed. STAR WARS will be a transformative investment for water access and recreational opportunities to energize Northeast Nebraska’s tourism economy.
Another priority for the Appropriations Committee was rural assisted living facilities. This year, the Committee agreed to fund a $3.2 million increase in provider rates for assisted living facilities in rural parts of the state. In 2022, DHHS studied the rates paid out to rural and urban facilities. It was found that urban facilities received higher rates despite often offering a similar level of service.
This year’s budget would increase rural assisted living single occupancy rates from the current rate of $62.73 per day to match the urban rate of $73.91 per day in the next fiscal year. In the past three years, over 17 assisted living homes have closed in Nebraska due to lagging income and increased costs, the most recent being the facility in Laurel. I agree with this increase; rural providers should not be shorted when compared to those in Lincoln or Omaha.
One fairly unique aspect of this year’s debate included the introduction of an “alternate budget” plan. Senator Machaela Cavanaugh of Omaha offered her own budget plan after being the lone “no” vote on advancing the main budget bills from the Appropriations Committee.
Her proposal would have cut the money for the prison currently being built north of Lincoln to fund community corrections and juvenile justice programs. Additionally, she proposed eliminating the Tier One Property Tax Credit Program and using the $780 million to restore the state agency budgets and programs that were slashed by the Appropriations Committee and increase TEEOSA state aid to public schools. This plan was defeated 4- 32.
I encourage you to let me know your opinion. You can reach me at (402) 4712801 or [email protected].
