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This week saw the legislature debate the mainline state budget. The latest projections from the Economic Forecasting Board lowered revenue projections for the current fiscal year by $80 million to $6.36 billion. The adjustment was based on anticipated decrease of $200 million in individual income, sales and use tax receipts, offset in part by projected increases of $120 million in corporate and miscellaneous tax receipts. Total projected revenue receipts for Fiscal Year 2023-24, however, were raised by $25 million and the FY 2024-25 projections were raised by $55 million.

The budget would set aside money for the governor’s proposed billion-dollar education future fund, $575 million for a canal to draw more water from Colorado, in accordance to the terms of the 1923 South Platte River Compact, and $366 million for a new prison. This revenue shortfall, combined with allocated spending for these proposals, leaves approximately $715 million left over in available funds for this biennium to devote to tax cuts, increased school aid and other priorities. However, this amount is about $100 million less than had been projected to be expended by the two packages of bills that provide for cuts in state income taxes and increases in tax refunds for property taxes paid.

Meanwhile, the projected balance of the Cash Reserve Fund will fall to $949 million by the end of the biennium. This figure represents approximately 14.2% of annual state revenues and is sufficient to fully run the state for about two months, which gives the state some cushion in case of an economic recession. The most substantial adjustment to the Cash Reserve Fund was an amendment, brought forward by Sen. Moser, which would prevent the transfer of $40 million in the Nebraska Universal Service Fund to the Cash Reserve Fund. The NUSF is administered by the Public Service Commission to fund projects to make sure that all Nebraskans have equal access to affordable telephone and internet services, regardless of where they live.

A common topic of discussion regarded the construction a new $366 million prison to replace the Nebraska State Penitentiary. Opponents of the proposal argued that the construction of the prison would not resolve Nebraska’s prison overcrowding situation.

They pointed to data last year from an analysis of the state’s correctional system conducted by the Crime and Justice Institute and the information provided during the debate on last year’s failed effort at criminal justice reform, LB 920. Opponents argued if the new prison is built, it will be overcrowded on day one and necessitate the need for an additional correctional facility to be built shortly thereafter. In my last legislative update, I discussed my desire to have a facility that incorporates up-to-date standards for programming, safety, and security. While I am hopeful an agreement can be reached with criminal justice, I believe we are at a point where a new prison makes sense given the age of the Nebraska State Penitentiary. A 2022 report by the Nebraska Department of Corrections estimates correcting deficiencies at NSP will cost $220 million, not accounting for a rise in inflation and long-term damage to facilities by recent water main breaks. Negotiations on criminal justice reform are ongoing with LB 50 and LB 352.

Feel free to call my office anytime at 402-471-2801 or email me at [email protected]. My mailing address is: Senator Barry DeKay, District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.