Ricketts: Budget needs ‘modifications’ to restrain spending
LINCOLN, Neb. (AP) — Nebraska Gov. Pete Ricketts said Monday he’ll look for ways to restrict state spending in next year’s session in response to a projected tax revenue shortfall.
Ricketts pledged to work with lawmakers on budget “modifications” that would bring state spending into line with money that’s available, but offered few specifics.
“Certainly I’m willing to discuss different ideas about how we do that,” Ricketts said at a news conference on an unrelated topic.
He wouldn’t rule out tapping the state’s $369 million cash reserve, commonly known as the rainy day fund. The reserve had been on pace to reach a record-high $729 million in June 2016, but has since shrunk to $369 million as lawmakers used the money to pay for earlier shortfalls and state projects.
Nebraska is on track to face another shortfall in next year’s session after the state economic forecasting board lowered its revenue estimates by $217 million for the current two-year budget cycle. The board will update its estimates again in February, in the middle of the 2018 session, but for now lawmakers face the prospect of another tight budget year.
On Friday, Ricketts announced that he has ordered state agencies to continue several cost-cutting measures that were put in place last year. The changes include a hiring freeze, a ban on non-essential travel, restrictions on equipment purchases and a reduction in money available for grants. Agencies were also warned to prepare for budget cuts and told they will see a 1 percent reduction in funding during the third and fourth quarters of the current fiscal year.
Ricketts echoed sentiments that the lingering revenue downturn is driven at least in part by a struggling agricultural economy and its ripple effect on other industries, such as manufacturing and retail.
At least two members of the budget-writing Appropriations Committee, Sens. Kate Bolz of Lincoln and John Stinner of Gering, have said they’re open to drawing money from the cash reserve to cover at least part of the expected shortfall.
Bolz said last week she plans to convene a group of economic and fiscal experts to dig deeper into why the state has struggled with revenue shortfalls over the last few years. Although state economists argue that the farm economy is main driver, some advocacy groups have blamed a series of income tax cuts passed over the last decade.
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