NTF
Issue Paper: legwatch32.doc. 7-05.
NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:
THE NEBRASKA STATE BUDGET
CRISIS: FY 2005-2006.
BACKGROUND. If the Appropriations Comm. budget passes, we will
see a 7.5 % increase in spending FY 05-06 and 6.4% FY 06-07, while revenue
growth increases by 4.9 % and 4% these fiscal years, below historic average.1
Over the last 10 yrs., the average yearly increase in General Fund
appropriations was 5.3%. This proposed budget is the highest in the last 3 yrs.2
General Fund spending would stand at $602.9 million more than if
senators froze the budget at its current level.3 The State Budget Office has disseminated a
series of bar graph charts that show horrific trends. Twenty years ago, Medicaid totaled 6% of the
state budget; now it stands at 17%.
State aid to schools went from 16% to 22% of the total general fund
budget. Spending sprees by the
Appropriations Comm. are much higher than in the past several years, higher
than Governor proposals. His budget lies
lower than the committee prelim budget by $64.7 million over the biennium.4
Biennium entitlements are 67.7% of the total, salary and health benefit
contracts 20.6%. This total is $119.9
million higher than the gubernatorial biennium budget.5 The main differences focus on university and
college salary and health benefit rates, retirement funding for teachers,
judges, and state patrol, special ed, and construction.6
The committee budget would spend $6.1 billion for state operations and aid
during the biennium, almost apologetically lying that most increases would fall
in areas in which senators have limited flexibility and control, such as
welfare, state aid to schools, and negotiated salary and benefit contracts.7
Actually, senators can end automatic increases and renegotiate labor
contracts. Although the Comm. prelim
report stated that increased revenue projections could finance tax cuts, the
Comm. has recommended none.8 Examining tax receipts as average annual
growth over 25 yrs. adjusted for inflation equals 5.2%. By FY 2013-2014, estimated general fund tax
receipts will increase $221 million, though state aid to ed and Medicaid
spending will increase $228 million, as these 2 sectors gobble geometrically
larger percentages of general fund receipts.9
Unless senators alter policies, we will see a fiscal meltdown. Liberal Sen. Don Pederson, chairman of the
Appropriations Comm., promised to stand tough on his budget proposal and fight
proposed budget cuts. To see the entire committee budget, log onto
www.unicam.state.ne.us/reports/fiscal/budget.
GLUTTONS. State aid to public schools will rise 30.2%, a $181
million yoke on taxpayers. Aid would increase by $65,605,525 in FY 05-06 and
$115,486,500 in FY 06-07.10 This expenditure is the largest part of the
budget hike. Medicaid spending would
rise 8.1%, or $117 million; funding for other welfare programs 10.2%.11
Postsecondary education would see a 6.8% hike. General Funds for all agencies would hike
5.9% in FY 05-06 and 5.6% in FY 06-07, 72% of this amount during the first
fiscal year for salary and insurance increases.12
Biennium spending on 43 state agencies would rise 9.2%.
EDUCATION. $2.4 million to boost scholarship monies for poor
college students. Higher ed student aid
programs would spiral 20.8% in FY 05-06.13 State colleges would see a 8.9% hike in FY
05-06, 6.77% in FY 06-07. UN-L would get
a 7.7% hike in FY 05-06, a 6.1% increase in FY 06-07.14
Aid to community colleges would rise 3.85%, mainly to help pay health
insurance increases of 13% annually, though legislators permitted these
institutions to bust their tax levy lids to collect additional property taxes.15
State aid to schools would rise 10.6 % in FY 05-06, 7.3 % in FY 06-07,
9% in FY 07-08, and 17.6% in FY 08-09.16 The higher amounts attribute from higher
spending growth from school district retirement contributions under present law
and present property valuation growth, making good cases for terminating the
Rule of 85 early retirement law and reforming the valuation system. See Table 19 in Appendix.
WELFARE. $1.75 million for health insurance for uninsured
Nebraskans at community health centers.
$200,000 annually would fund intrusive home visits to families of
newborns. State supplemental SSI would
rise 5%. Those not eligible for federal
SSI payments may qualify for state SSI, an unnecessary drain on taxpayers. The
state spends over $7 million annually on State Supplemental Income payments to
people not eligible for federal SSI benefits.1 ADC would grow 3% each year. Child care for poor families above the ADC
cutoff level would allow those at 185% of federal poverty guidelines to receive
child care subsidies on a sliding scale.
A 14% yearly increase in funding for providers of child care. A 3% increase in emergency assistance.2
A 10% increase each year in the biennium for socialized health insurance
for poor children.3 The Children’s Health Insurance Program which
offers medical coverage for those up to 19 and whose family income is up to
185% of the federal poverty level would see an 8% hike in general funds each
biennial year.4 Behavioral health aid would rise 29.2% in FY
05-06.5
PRIME
WASTE. State officials representing Health and Human
Services “trumpeted the recovery of
almost $2 million” of the almost $6 million of known overpayments in state food
stamp, child care assistance, and foster care programs. It cost Nebraska
taxpayers $325,000 to collect the first $1.95 million, indicating an almost $1
million cost to collect the full amount. The Director of the HHS Department of
Finance and Support boasted, “This is quite a success story.” A ludicrous
success story when the overpayments should not have happened and the net loss
to Nebraska taxpayers is still $1 million dollars. Recipients of overpayments
may not have known they were overpaid and now face paying back funds or reduced
payments over the next months. If HHS wants to “trumpet” a victory, it
should rectify the mismanagement that allowed these overpayments.
LAW
& ORDER. FY 2006 $85,500 and FY 07
$138,200 expenditures for court interpreters, used in court cases and probation
services. The need has increased because
of growth in our illegal alien population.6 Court interpreter costs caused a $60,000
deficit in FY 05.7 A 6% hike each biennium year for inmate daily
care costs.8
OTHER
AGENCIES. For FY 06, the Legislative
Council garnered an 8.2% raise in funding, Dept. of Education 8.8%,
HHS-Regulation 13.6%, HHS-Finance 8%, Dept. of Roads 10.9%, Dept. of Natural
Resources 45.2%, Military Dept. 27.5%, Postsecondary Ed Coordinating Committee
18.5%, NE Arts Council 22.3% (an unnecessary bureaucracy), Comm. on Industrial
Relations 14.2%, and Dept. of Economic Development 23.3%.9
RETIREMENT. Consultants for the Retirement Board predicted a $17
million shortfall in yearly contributions to teacher, judge, and state patrol
retirement funds as of July, 2004. The
shortfall will increase for 2 more years, $32.9 million in FY 06-07 and $34.3
million in FY 07-08. The committee wants
higher employer/employee contributions and court fees to cover part of this
deficit.10 Retirement Systems
would glean $137 million more in FY 05-06.11
SALARIES. State Patrol troopers would receive a 7.7% pay hike
in FY 06 and 7.9% in FY 07. State
college employees would receive a 3.75% hike in FY 06 and 4.25% hike in FY
07. UN-O faculty would receive a 3.95%
hike each biennial year; UNK faculty 4.4%.12 All these raises up to twice those given
other state employees!
HEALTH
INSURANCE. Employee health insurance
hikes would reach $5.4 million in FY 05-06, $12 million in FY 06-07. a 10.8
% increase in FY 05-06 and 12% hike in
FY 06-07. The cost share sees the state
paying 79%, employees a 21% contribution.
Health insurance costs for UN-L will increase by 15% for both fiscal
years, 9.6% for state colleges.1 Most other government employees at all levels
of government pay about 30% of their premiums.
RESERVE. For the biennium, the budget shows a balance of $147
million below the minimum 3% reserve.2 The cash reserve will have about $261 million,
above previous projections, but mandated spending that accelerates annually
will consume over $160 million of this surplus.
FRIVOLOUS. Senators voted to ladle $400,000 into the Commission
on the Status of Women, a previously defunded bureaucracy that serves no useful
purpose and should merit permanent defunding and closing. This funding and
another desirous of prohibiting state agencies from discriminating against sex
perverts in hiring meant to advance a liberal social agenda, creating new
protected classes of citizens. The budget banned discrimination against homos
by institutions receiving research funds from state tobacco settlement dollars.
The committee ladled $350,000 in FY 05-06 and $500,000 in FY 06-07 to the Dept.
of Economic Development for tourism matching grants and another $150,000 to
fund the NE Treasures study of tourism attractions.3
$15 million would drain from the cash reserve fund for job training,
thought the stae already gives funds to educational institutions for job
training.4 All unnecessary expenditures.
CONSTITUTIONAL
OFFICERS. LB 683, passed by the
Legislature, raised the Governor salary from $85,000 to $114,000, a 34% hike,
the Lt.-Gov. salary from $60,000 to $65,000, the att-.gen. salary from $75,000
to $90,000, the sec of state salary up to $75,000, a 29% hike, the state
auditor salary up to $75,000, a 51% raise, the state treasurer salary up to
$75,000, a $15,000 hike, and public service commissioners from $50,000 to
$60,000, a 10% hike. The state
constitution allows constitutional officers to receive a pay hike once every 4
yrs., and they have received one each cycle.5
CONCLUSION.
This budget
funded every requested dept. and agency budget item not increased in the
January prelimi- nary budget. Senators
consider taxpayers as bottomless ATM machines. Senators must prioritize
spending programs and reduce or terminate low-priority programs. Tough choices require strong leadership. See NTF list of 158 budget cut suggestions
that will help you lobby your state senators to pare expenditures listed in
this issue paper. We must halt these horrid deficits that bring tax hikes. Email us at ncf@phonet.com
or call (402) 551-0921. NTF sent all 9
members of the Appropriations Comm. this list.
Only one senator replied, uncommitted. Thank goodness for upcoming term limits!
Research,
documentation, and analysis for this issue paper done by NE Taxpayers for
Freedom. This material copyrighted
by NE Taxpayers for Freedom, with express prior permission granted for its use
by Citizens for Local Control, Cherry County Taxpayers, Dawes County Taxpayers,
and other groups in the Tax Freedom Network. 7-05
C
1 Appropriations Comm. Budget, p. 1.
2 Appropriations Comm. Budget, pp. 25-26.
3 Appropriations Comm. Budget, p. 28.
4 Appropriations Comm. Preliminary Report, 2-05, p. 2.
5 Appropriations Comm. Budget, p. 2.
6 Appropriations Comm. Budget, p. 3.
7 Unicameral Update, 4-25-05.
8 Appropriations Comm. Preliminary Report, 2-05, p. 3.
9 State Budget Office, May 2005.
10 Appropriations Comm. Budget, p. 29.
11 Appropriations Comm. Budget, p. 2.
12 Appropriations Comm. Budget, p. 24.
13 Appropriations Comm. Budget, p. 23.
14 Appropriations Comm. Budget, p. 46.
15 Appropriations Comm. Budget, pp. 23 & 43.
16 Appropriations Comm. Budget, pp. 11 & 38.
1 Appropriations Comm. Budget, p. 35.
2 Appropriations Comm. Budget, p. 35.
3 Appropriations Comm. Budget, p. 12.
4 Appropriations Comm. Budget, p. 31.
5 Appropriations Comm. Budget, p. 23.
6 Appropriations Comm. Budget, pp. 44.
7 Appropriations Comm. Budget, p. 88.
8 Appropriations Comm. Budget, p. 12.
9 Appropriations Comm. Budget, pp. 55-57.
10 Appropriations Comm. Budget, pp. 3-4.
11 Appropriations Comm. Budget, p. 52.
12 Appropriations Comm. Budget, p. 50.
1 Appropriations Comm. Budget, p. 50.
2 Appropriations Comm. Budget, p. 1.
3 Appropriations Comm. Budget, p. 47.
4 Unicameral Update, 5-9-05.
5 Unicameral Update, 5-3-05.