NTF
Issue Paper: legwatch50.doc. 10-07.
NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:
THE NEBRASKA STATE BUDGET
CRISIS: FY 2007-2008.
BACKGROUND. Passage of the FY 2007-08
budget means a total of $424.5 million in tax cuts for Nebraskans during the
next 2 fiscal years. However, General
Fund spending will increase during this period by $424.6 million, leaving a
deficit. Senators raided $109 million
from the Cash Reserve Fund for capital construction projects by disingenuously
transferring these dollars to the Capitol Construction Fund.[1] The projected financial status for the next
biennium will see a $277.5 million shortfall from minimum reserves.[2] General Fund spending will have increased by an annual
average of over 6% from FY 1989 to FY 2009.
General Fund appropriations have increased at a faster rate than
spending of federal monies.[3]
Revenues senators forecast to grow only 2.8% in FY 07-08 and 4.7% in FY 08-09.[4]
General Fund net revenues supposedly
will rise by 14% by FY 2010-11, but appropriations will increase by 27%,
leaving us with a deficit of $19.8 million.[5]
The average growth in revenue for the last 5 fiscal years in actual receipts is only 6.9% per year.[6] Appropria- tions Comm. action totaled $486.2
million, and it used all except $310,000 of its funds in excess of minimum
reserves required.[7] The cash reserve fund will plummet from $516
million in FY 06-07 to $48.3 million in FY 2010-11.[8] Our property taxes are not dropping in
response,[9]
yet general fund appropriations to local governments comprise 34.7% of the pie.[10] This aid to local subdivisions sees an 8.3%
hike in FY 07-08 and 8.6% in FY 08-09, over twice the average growth of other
categories.[11] The 4.2% average growth in agency operations
is higher than the inflation rate during the last 20 yrs. General fund increases for all state agencies
the next 2 fiscal years will reach 5.3%, or $50.9 million, twice the rate of
CPI inflation. Appropriations of all
funds will rise by 4.8% in FY 08.[12] 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. The largest
hikes went for salary and health insurance costs. Aid to individuals will grow by 4.2% in FY
07-08, or $39.5 million.[13] Appropriations by senator legislative bills
will total $16.4 million from the general fund in FY 07-08 and $22 million in
FY 08-09.[14] Unless senators alter policies, we will see a
fiscal meltdown.
To see the entire budget, log onto http://nebraskalegislature.gov/web/public/reports/fiscal. Then click on 2007 biennial budget report.
EDUCATION. Under general fund aid to local governments,
state aid to schools comprises 66.4%, special education 15.8%.[15] Total state aid to K-12 schools ran $16.2
million more than estimated by senators, up 8.4%,[16] up
43.2% in raw dollars.[17] General fund state aid to K-12 rises 7.4%, or
$52.2 million more in FY 07-08, and 10.5%, or $78.9 million more, in FY
08-09. The normal annual growth rate is
5-5.5%. This cost increase largely
occurred because of a huge increase in public school operating expenses being a
major component in setting school aid amounts, an increase in cost growth
factor by 1%, and inflation formula allowances for special education and
transportation.[18] State aid to ed required a $3+ million legislative
deficit appropriation.[19] School breakfast reimbursements will hike 40%
in FY 07-08 and 8.4% in FY 08-09.[20] $4.7 million more for educational service
units, a 41.6% hike, partly to restore previous funding reductions.[21] Biennium spending on special education rises
5%.[22] State
aid to early childhood programs up $4.1 million in FY 08-09, reaching $950.6
million in FY 2010-11.[23] Taxpayers
funded $2.5 million to the Att.-Gen. office to fight school finance lawsuits
filed by OP$ and other districts greedy for additional state largesse.[24] Education Dept. funding will rise by 5.5% in
FY 08 and by 7.8% in FY 09.[25]
HIGHER
EDUCATION. $24
million more for community colleges, up 22.6%.[26] General Fund increases for state colleges
will rise by 5.5% in FY 07-08 and 5.3% in FY 08-09, employee salary hikes
averaging 3.75% in each biennium year. In the next 2 fiscal years, university
spending will rise 4.1%.[27] $1
million more in general funds fueled the NE Scholarship Program, a 17.5%
increase.[28] FY 2007-08 appropriations to universities
and colleges comprise 44% of the general fund budget. University and state college employees
received 14.4% salary and benefit hikes for the biennium, much over the cost of
living increase.[29] UNO employees earned 4.3% salary hikes each
year, UNK employees grabbing 4.4% hikes each of 2 yrs., costing $18.4 million
in FY 07-08 and $37.6 million in FY 08-09.[30] The Post-Secondary Education Coordinating Comm.
will see an 8.1% hike in FY 08 and 9.3% hike in FY 09.[31]
WELFARE. Medicaid
costs will rise 11.6%, costs for the socialist childrens’ health care program
will soar by 10.5%, and general welfare costs will hike 9%, mostly for child
welfare.[32] Senators wanted to spend 31.8% more on
community health centers, but the governor vetoed much of this hike.[33] $850,000
more in general funds would have subsidized these outlets in FYs 07-08 and
08-09.[34] The
welfare dept. budget comprises 18.1% of the general fund budget. General fund aid to individuals sees a 60.3%
slice of the pie for Medicaid, 24.5% for general welfare.[35] The childrens’ health care program now offers
medical coverage to 23,000 kids up to age 19 who do not have insurance and
whose family income is below 185% of
the federal poverty level. The program
will increase by 10.5% during the next 2 fiscal years. In this biennium, domestic violence
prevention spending will go up $1.5 million, ADC rise over $346,000, child
welfare reaching $3.1 million. Child
care subsidy services pay money to poor families above the ADC level, at 120%
of fed poverty guidelines, up to 185%
if leaving the ADC system.[36] Child
advocacy centers will receive 10% hikes in FY 07-08 and 20% increases in FY
08-09.[37] Welfare behavioral health aid will increase
by 35.3% in FY 08, area agencies on aging by 9.6% in FY 08 and 9% in FY 09.[38] The feds in 1996 made specific legal
immigrants ineligible for food stamps.
NE generously established its own program to continue this coverage for
600 who receive the stamps monthly. The cost for this largesse will rise 5% in
both FYs 07-08 and 08-09.[39] A 9% increase in emergency assistance in each
of the next 2 fiscal years will aid poor families with minor children, offering
food, housing, clothes, and utility subsidies.[40] New Medicaid clients will cost taxpayers an
additional $30.4 million in FY 07-08 and $56.3 million more in FY 08-09.[41] State Supplemental Income will 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 SSI payments to people not eligible for
federal SSI benefits.
LAW
& ORDER.
Inmate
per diem costs will rise by 6% because of inmate number increases.[42] Additional funding for these costs will add
over $1 million in each of the next 2 yrs.[43] 4.8% more for our state court system.
Corrections comprises about 12.1% of the entire general fund budget. 4.8% more
for our state court system.[44]
All court and probation employees will
receive 4.75% salary increases FY 07-08.
$329,260 in FY 07-08 and $329,634 in FY 08-09 for court interpreters,
used in court cases and probation services, some earning $50 per hour, with
minimum 2 hr. payments plus mileage.
This cost in FY 2006 stood at $85,500. The
need has increased because of growth in our illegal alien population. An Interpreter Advisory Comm. earns $10,000
in expenses. State judges received 3.5%
salary hikes in July and will receive the
same percentage raise next July.[45] State Supreme Court costs will increase by
4.8% next year. The State Patrol will
get a 4.6% hike in FY 08 and a 9.5% boost in FY 09. State Patrol spending will hike by 3.8.[46]
OTHER
AGENCIES. Aging
programs costs will rise by 7.5%.[47] Public Service Comm. costs will rise by 5.3%,
the Revenue Dept. by 26.7% and 23% in the next 2 fiscal years, the Agriculture
Dept. by 39.8%, the Fire Marshall by 23% in FY 09, Game and Parks Dept. by 7.8%
in FY 07-08, the Liquor Control Commission by 11.6% next year, the Dept. of
Administrative Services by 29.7% and 14.3% the next 2 yrs., the Equal
Opportunity Comm. by 8.4% in FY 08, the NE Arts Council by 12.8% next year, the
Comm. of Industrial Relations by 23.4% in FY 08, the environment dept. by
62.2%, the Accountability & Disclosure Comm. by 26.1% in FY 09,[48] and the
NE Humanities Council by 9.4%.[49] The Oil & Gas Comm. will see an 8.5%
increase in FY 08, the Geologists Board an increase of 15.4% in FY 08. The
Dept. of Economic Development will see an increase of 16.3% appropriation in FY
08, the Investment Council a 95.7% boost in FY 08, the Dry Bean Board a 32.6%
hike in FY 08, the Tax Equalization Review Comm. a 5.8% hike in FY 08, and Public
Advocacy a 6.5% increase in FY 08 plus a 4.3% hike in FY 09.[50]
AID TO LOCAL GOVERNMENTS. State aid to local government subdivisions will rise
by 8.3% ($87.8 million) in FY 07-08 and by 8.6% ($98.3 million) in FY 08-09.[51] Overall hikes in state aid to these localities
ran about 80% greater than other categories of spending combined.[52]
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 board wants
higher employer/employee contributions and court fees to cover part of this
deficit.
SALARIES. State employee salary
hikes are up by 3.8% in FY 08 and 3.9% in FY 09. State Patrol, Game and Parks, Fire Marshall,
and other law enforcement employees garnered 6% pay hikes in each of the next 2
yrs.
HEALTH
INSURANCE. For
state employee health insurance, the state pays 79% of premiums, employees pay
21%. In private enterprise, the ratio
normally is 70%/30%. General Fund cost
increases for these premiums are $4.4 million in FY 07-08 and $11.2 million in
FY 08-09. During recent years, reserves
in the health insurance fund have covered shortfalls, because the premiums are
insufficient to cover costs of health plans.
There exists an imbalance between premium revenues and claims paid. So, taxpayers witness a transfer of up to $12
million looted from the Cash Reserve Fund from FY 06 to FY 2011. State college health insurance costs will rise
by $405,331 in FY 07-08 and by $841,595 in FY 08-09.[53] College health insurance plan costs will increase by
7.6% in both FY 07-08 and FY 08-09. Employee
health insurance hikes will rise by 7% in FY 07-08 and 10% in FY 08-09. Ten-year average annual health insurance
rates have risen by 12.3%. [54]
CASH
RESERVE. This
fund balance will fall from $516 million in FY 06-07 to $471.2 million in FY
08-09. Senators transferred $12
million from this fund to state health insurance funds for cash needed to
balance the difference between premiums collected and claims paid.[55]
CONSTITUTIONAL
OFFICERS. Costs in the Lt.
Gov. office will rise by 7.9%, 43.4% for the Att.-Gen. office, 12.6% for the
Sec. of State. The
state constitution allows constitutional officers to receive a pay hike once
every 4 yrs., and they have received one each cycle.5
CONCLUSION.
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 noted in this
issue paper. We must halt these horrid deficits that bring tax hikes. Email us at netaxpayers@cox.net or call (402) 551-0921.
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. 10-07.
C
[1] State of Nebraska budget 8-07, p. 2.
[2] Ibid, p. 6.
[3] Ibid, p. 89.
[4] Ibid, p. 19.
[5] Ibid, p. 4.
[6] Ibid, p. 21.
[7] Ibid, p. 7.
[8] Ibid, p. 16.
[9] Ibid, p. 33.
[10] Ibid, p. 34.
[11] Ibid, p. 35.
[12] Ibid, p. 90.
[13] Ibid, pp. 25, 35.
[14] Ibid, p. 88.
[15] Ibid, p. 35.
[16] Ibid, p. 6.
[17] Ibid, p. 39.
[18] Ibid, p. 36.
[19] Ibid, p. 111.
[20] Ibid, pp. 52-53.
[21] Ibid, pp. 56, 9.
[22] Ibid, p. 13.
[23] Ibid, p. 55.
[24] Ibid, p. 60.
[25] Ibid, p. 91.
[26] Ibid, p. 8.
[27] Ibid, p. 65.
[28] Ibid, p. 51.
[29] Ibid, pp. 34, 40.
[30] Ibid, p. 69.
[31] Ibid, p. 94.
[32] Ibid, pp. 13, 39.
[33] Ibid, p. 33.
[34] Ibid, p. 50.
[35] Ibid, p. 34.
[36] Ibid, pp. 42-43.
[37] Ibid, pp. 62-63.
[38] Ibid, p. 76.
[39] Ibid, p. 43.
[40] Ibid, p 46.
[41] Ibid, p. 48.
[42] Ibid, p. 13.
[43] Ibid, p. 64.
[44] Ibid, pp. 33-34.
[45] Ibid, p. 60.
[46] Ibid, p. 95.
[47] Ibid, p. 33.
[48] Ibid, pp. 73, 75.
[49] Ibid, p. 77.
[50] Ibid, pp. 95-99.
[51] Ibid, p. 35.
[52] Ibid, p. 40.
[53] Ibid, pp. 69-70.
[54] Ibid, p. 70.
[55] Ibid, pp. 16-17.
5 Unicameral Update, 5-3-05.