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Gov. Heineman Vetoes $65 Million in Budget

March 31, 2014

Calls for additional property tax relief with
taxpayer dollars vetoed from budget

(Lincoln, Neb.) Saturday, Gov. Dave Heineman highlighted many areas of agreement in state funding priorities. He also issued his line-item vetoes in LB 130, LB 905 and LB 906, which constitute the Legislature's adjustments to the mid-biennium budget for fiscal years 2013-2015. Gov. Heineman noted that by vetoing millions of dollars of new spending, those taxpayer funds could instead be used for property tax relief for Nebraska's citizens, including homeowners, farmers, ranchers and small business owners.

"For the past year, Nebraskans have been very clear in telling the Legislature's Tax Modernization Committee that their biggest concern is high property taxes, and I believe that providing property tax relief is a more important priority than funding fountains at the State Capitol," said Gov. Heineman. "For more than 80 years, the capitol building has existed without fountains and we don't need them now. Providing an additional $25 million in property tax relief for Nebraska homeowners, farmers, ranchers and small business owners can be accomplished in the remaining days of the Legislature if State Senators make it a priority."

In total, the Governor issued approximately $65 million of line-item vetoes to trim the budget that was passed by the Legislature. General fund reductions accounted for $26 million of the total vetoes.

Gov. Heineman noted that developing a budget is a challenging process and that he appreciates and understands the related challenges. While the Governor and the Legislature agreed on many funding priorities, there were areas of respectful disagreement where the Governor used his line-item veto to make spending reductions.

"I want to thank and acknowledge the Appropriations Committee and the Legislature for prioritizing water sustainability funding, Game and Parks deferred maintenance funding, developmental disability waiting list funding and early childhood education funding."

Governor Heineman approved the following funding:
*$10.5 million for the Natural Resources Development Fund.
*$19.9 million for the Water Sustainability Fund in fiscal year 15.
*$19.8 million for the Water Sustainability Fund in fiscal year 16 and 17.
*$10 million for the Game and Parks Maintenance Fund, including the funding for Ponca State Park and Arbor Lodge at Nebraska City.
*$4.7 million for the Developmental Disability Aid Program and
*$3.2 million for the Early Childhood program.

Governor Heineman also indicated that he will sign LB 814 into law next week that will provide Game and Parks an additional $3 million annually for deferred maintenance.

Key vetoes issued include the following:
*$7.4 million in general funds provided to the Nebraska Supreme Court for a Juvenile Services Project Contingency Program. This appropriation represents an additional 37.4 percent over the total amount of general funds already provided to the Courts in the current biennium budget. This funding is unnecessary. An analysis of the year-to-date spending through Feb. 28, 2014, the Supreme Court's Office of Probation - Community Corrections Program reveals the Supreme Court is estimated to underspend current general fund appropriations by approximately $8 million by June 30, 2014.
*$2.5 million in Nebraska Capital Construction Funds for the construction of four courtyard fountains. The State Capitol was completed in 1932. The decision was made at that time not to install fountains because it was not a priority use of taxpayer money. The governor noted that the citizens of Nebraska have managed well without fountains at the capitol building for more than 80 years.
*$11.7 million in Nebraska Capital Construction Funds to renovate the heating, ventilation and air condition system in the State Capitol. The Capitol Commission did not request funding for this project during the mid-biennium budget process. Additionally, LB 905 only provides funding of $11.7 million of the $77.8 million currently estimated total cost of this project. That would leave the balance of $66.1 million to future Legislatures to resolve in their budget process. It was noted that a long-term project of such magnitude should be presented and considered during a regular biennium budget process alongside other capital improvement projects, with full consideration and a commitment to recognize and fund the entire cost identified for the project, if that is deemed a priority at that time.
*$10 million cash fund appropriation and the $10 million general fund transfer provided to the Department of Economic Development for the Job Training Program. No increase was requested nor is it needed by the Department of Economic Development for immediate program needs.
*$1.5 million in general funds and $1.5 million in federal funds for the proposed state ward permanency pilot project. A request to establish a state ward permanency pilot project was withdrawn by the Department of Health and Human Services because the request was more appropriate to address during a regular biennium budget process. After the veto, adequate funding remains to serve state wards.
*$5.4 million for increased provider rates. The Developmental Disability Aid program received significant increases when the biennium budget was developed during the 2013 Legislative Session, including $5.9 million for provider rates and $42 million for a new rate methodology for paying providers. The new rate methodology was adopted during the 2013 Session to pay providers based upon actual costs of providing services in the state with provisions for future adjustments for inflation. The additional new funding is premature before the new methodology is implemented.
*$10 million in general funds redirected from the Affordable Care Act (ACA) contingency fund program to the Behavioral Health Aid program at the Nebraska Department of Health and Human Services. The $10 million represents a portion of the anticipated savings to the state behavioral health program. These savings should be captured as intended to help offset other ACA related costs to the state.
*$1.1 million from the Water Sustainability Fund that was earmarked for the Omaha Sewer Separation project. This project is a local project and should be paid with local funds.
*$250,000 from the Department of Education for a specific vendor identified by name, potentially violating Article III, Section 18 of the Nebraska Constitution. This is described as unconstitutional and is an inappropriate expenditure.

The additional line-item vetoes are outlined in the LB 130, LB 905 and LB 906 veto messages.

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