The Nebraska Legislature on Wednesday moved LB 818, the fund transfer portion of the state budget, to final round debate on a voice vote after reducing the amount of money going into the state’s cash reserve by $170-million dollars.
In crafting the proposed budget, the Appropriations committee had recommended putting $950-million dollars into the state’s “rainy day” account, but chairman Rob Clements yesterday called for moving over only $780-million.
Clements said leaving the additional $170-million in the general fund would cover the loss of tax revenue projected from Gov Jim Pillen’s income taxes cuts and the decision to spend another $80-million on provider rates for social services.
Lawmakers already questioning whether the tax cuts, projected to reduce state revenue by $5.5 billion dollars over 6 years, were sustainable or would force future cuts in services or tax hikes reacted strongly to Clements’ proposal.
Senator Danielle Conrad of Lincoln said she was surprised that budget adjustments were already being made before final approval of the tax cuts.
Omaha Senator John Cavanaugh said “it raises red flags” to raid the rainy day fund in the midst of a record revenue surplus.
Senator Tom Briese of Albion, one of the main advocates for the tax cuts, defended the smaller cash reserve transfer by saying revenue projections for the next 5 years are very conservative, and revenues are likely to be much higher.
If not, he said, future lawmakers can make adjustments and “hit the pause button,” adding that he’s convinced such a move won’t be necessary. In the end, Clement’s change was approved on a 31-9 vote