NE Budget: Senators Hope Feds Will Bail Us Out

Nebraska's Senators Too Eager For Federal Funds. Too bad THEY don't know the bottom of the bucket is rusty…

In late June, members of Grassroots in Nebraska attended an Ad Hoc Committee meeting at the State Capitol, in part to learn more about the budgeting process and some of our Senators. Our primary purpose, however, was to understand the direction the Legislature might be headed with regard to the looming budget shortfall for Fiscal Years 2011 – 2013.

I purposefully took copious notes of the meeting, had them reviewed by another spectator, and have made them available online. I refrained as much as possible from editorializing in my notes, as I had always planned to write a separate analysis. If you wish to read the notes in full, click HERE.

What I have laid out here is “the good, the bad, and the ugly” – my analysis of the proposed process and the philosophy that seems to underpin it.

Quick Facts:

  • Article XIII, Section 1, of Nebraska’s Constitution prohibits the state from contracting debt greater than $100,000, with very limited exceptions. In the event of budget shortfalls, money cannot be borrowed, so spending must be cut or taxes raised.
  • A special legislative session was required in November 2009 to handle a budget shortfall for the 2009 – 2010 budget year. Recognizing there is an even larger projected budget shortfall for the biennial budget 2011 – 2013 and that current state statutes did not give the Legislature much flexibility in dealing with budget issues, the Legislature passed LR 542 near the end of the 2010 legislative session.
  • LR 542 was necessary because state statute authorized the Legislature to determine how much funding the different state agencies received, but any changes or cuts in particular programs within those agencies required specific legislation.
  • LR 542 created an Ad Hoc Committee, chaired by Speaker of the Legislature, and whose members are the chairs of each of the Legislative Committees.
  • At the time of the meeting, the projected shortfall was $680 million for the 2011 – 2013 budget period, meaning an annual deficit of $340 million.
  • $340 million is essentially 10% of the annual Nebraska budget of $3.4 billion.
  • There appears to be “no appetite” for raising taxes, as noted by Speaker Mike Flood, so the budget must be cut. The special process was created precisely for eliminating state programs, not just cutting or trimming. Cutting, trimming, etc., are, by state statute, the duty of the Appropriations Committee.
  • Committee Chairs were instructed to work through their respective committees to draw up options lists for cutting programs 10% across the board.
  • The process, if followed, would mean all the work of the Committee would be completed to allow any legislation to be introduced early in the 2011 Legislative session and, therefore, easily coordinated with the usual budget process.

The Good:

A recognition that the budget should be cut rather than taxes increased is to be applauded.

The Speaker of the Legislature, Mike Flood, should be commended for running an efficient meeting and for clearly laying out the process to all present. Most importantly, all who determined to handle the budget shortfall well in advance are to be commended. It became clear last session (through visits and observation) that the budget is not well understood by many of Nebraska’s Senators, and the LR 542 process should increase their knowledge significantly.

Flood is to be commended, beyond what has already been noted, for reminding the Senators of their legislative duty – the Legislature holds the power of the purse strings. This admonishment is very likely necessary considering that long term bureaucrats, which are mostly part of the executive branch, will be providing much of the information to the Committees.

In addition to suggesting the elimination of programs, Committee chairs were encouraged to compile lists of suggested general cutting or trimming ideas and submit them to the Appropriations Committee Chair. Appropriations can use that information when engaging in the usual budget process. I found this to be a hopeful sign that, if any of the Legislative Committees discovered wasteful spending, there was some outlet for them to submit that information.

The Bad:

Citizens are not allowed to observe some of the process. One of the inadequacies of our Unicameral system is that “increased” media access is thought to be a sufficient safeguard for the people’s interests. While the press is allowed access to many aspects of the process, if the people of Nebraska wish to sit in as observers, as members of “The Second House”, we should be allowed to do so.

The atmosphere at the meeting and the plan being followed indicates the Senators have no concept of cutting government unless they are forced to do so by the Nebraska Constitution, and then only to the minimum level required. Nebraska may be in relatively better economic shape than many other states, but that does not mean that government is either not spending wastefully or providing unnecessary services. With consistent budget shortfalls and an economic outlook that grows dimmer by the day, it seems now would be the time to take a far closer look at how Nebraska is spending our money.

Senators seemed predisposed to use the majority of the “rainy day” funds available to cover the first $340 million shortage, rather than getting more aggressive about cutting spending.

There were no vocal advocates present for shrinking government. Almost every comment made pertained to avoiding cuts for one reason or another. Further, the comment from the Revenue Chair, Senator Abbie Cornett, was not only a bit ominous, but also seemed like political double-speak. She noted the Revenue Committee was already looking at “matrices to supplement revenue”. Translated for us lesser beings, that means tax increases.

The Ugly:

By following a path of 10% cuts across the board, there is an inherently flawed philosophy at work. An across the board strategy assumes that all departments and programs are equally valid, that all are proper functions of government, and that none should be looked at with any particular scrutiny.

A phrase repeated by too many of the Senators present was this program or that program could not be cut because it is a federal program, it is a program that receives federal matching funds, or is “mandatory”.

Mike Calvert, the bureaucrat from the Legislative Fiscal Office, very clinically detailed how there had been a hope that Congress would provide additional “ERA” dollars, which would solve a number of problems. Unfortunately, this too requires translation. “ERA” means funds from the February 2009 Stimulus bill. As of the time of the meeting, it did not appear as if Congress was going to vote for those additional funds.

None of the Senators present made any remarks regarding the “ERA” funds.

Do our Senators realize that federal money does not fall out of the sky? I suppose in some ways it does, if one considers the sources (borrowing, printing). If they do, one would like to think that there would be someone in the room who would object. All evidence points to the very unfortunate fact that our Nebraska Senators are eagerly looking forward to any additional federal dollars that will come Nebraska’s way.

As another member of GiN who attended the meeting pointed out to me a few days later…

“For me the process almost seemed like a “going through the motions” or placation of the public. You know, throw the dog a bone. Everybody was polite, and perhaps that’s the Nebraska way, but everything that took place almost seemed like a pretty well orchestrated public relations initiative.

I found myself wondering who was there (the audience) and what was their motive for being there? The one thing I was waiting to come out, and it never did, is that the people of Nebraska are hurting and that’s why the revenues are down. I certainly didn’t get the impression that there was one Senator in there who had the backbone to make that statement and take action accordingly.”

Sadly, our elected officials in the legislative branch seem fine with the idea of playing “kick the can”. They will do only what they cannot avoid when it comes to cutting spending and leave future budget problems and future federal strings to be dealt with later, hopefully by others. The trouble is, when these folks leave office, we taxpayers will still be here, dealing with the mess.

In my next article on this topic, I will attempt to put the LR 542 late June meeting into the context of events that have occurred since.

In the meantime, the video below, while dealing with budget cuts proposed at one stage by President Obama, give some sense of the frustration felt by liberty-minded, limited government folks in observing our Unicameral at work:

This entry was posted in Nebraska and tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.