Nebraska legislative committee says state must urgently replenish lowered rainy day fund
The conclusion of a legislative Planning Committee report, released Monday, regarding the state’s rainy day fund, was a matter of urgency.
As committee chairman Paul Schumacher of Columbus leaves the Legislature in nine days, he and his nine-member committee have this plea: Restore the rainy day fund to two times an average month’s state revenue and, absent significant deterioration in the state’s economy, do it over the next two budget cycles.
“The tool fashioned by the statutes to minimize the need for sudden unplanned tax increases or painful and costly program abortions is a strong reserve of cash,” the report said.
And committee members had a suggestion as to how to restore that cash reserve. Senators should augment it by creating “internal loans” for construction, capital projects and long-term investments, and a way to repay them when borrowing from the rainy day fund.
During the past two biennial budgets, cash reserves were approximately halved, from about $730 million to $330 million. Most concerning was that the reduction occurred during relatively good times, Schumacher said.
The report summed it up this way, “Simply put, the drawdown on reserves meant expenses were not cut enough or revenues were not raised enough. In either case, the trend is most disturbing and, should it be permitted to continue, a fiscal crisis will ensue.”
The committee said restoring the reserve over the next four years is “absolutely essential if the state is to meet its obligations and be able to adapt to the unmistakable challenges projected by the Planning Committee over the last decade.”
This month, Gov. Pete Ricketts will propose the budget for the next two years, and the Legislature’s Appropriations Committee will hone that proposal and present it to the full Legislature several months later for final approval.
Other committee members were: Vice Chairman Tony Vargas; Sens. Matt Hansen, Lou Ann Linehan, Merv Riepe, Matt Williams; Executive Board Chairman Dan Watermeier; Appropriations Chairman John Stinner; and Speaker Jim Scheer.