Budget plan cuts most agencies

LINCOLN — A compromise plan for the Nebraska state budget would cut most state agencies by 2 percent next year while leaving enough money so lawmakers could continue prenatal care for undocumented immigrants.

The Legislature’s Appropriations Committee approved a proposal Tuesday that combines spending cuts and fund transfers to close a more than $45 million gap in the budget period that ends June 30, 2011.

State Sen. Lavon Heidemann of Elk Creek, the Appropriations chairman, said he was pleased to have all members of the committee together on the proposal.

Several members spent the weekend negotiating the compromise, which was not completed until early Tuesday afternoon.

The budget is due to the full Legislature on Thursday.

The resulting plan would reduce state spending to $6.72 billion for the two-year budget period, down from the $6.74 billion total the Legislature reached at the end of a November special session. Before that session, the budget was $6.94 billion.

The plan leaves the University of Nebraska budget untouched and largely spares the state’s Affordable Housing Trust Fund, which earlier proposals planned to tap.

The compromise includes a $3 million transfer from the state’s cash reserve fund, along with transfers from several other cash funds.

The plan assumes a $6 million savings in the state Medicaid budget from ending prenatal care to undocumented immigrants.

But it also leaves nearly $3.8 million on the table — enough to continue coverage if lawmakers approve a bill creating a special children’s health insurance program for those women.

The new program would cost less than traditional Medicaid coverage because the federal government provides a higher match for children’s health insurance programs.

Nebraska had provided prenatal coverage in the past based on the unborn child’s eligibility.

The state this year ended the coverage after federal officials said federal law requires the coverage to be based on the eligibility of the pregnant woman.

Nebraska’s current budget shortfall resulted from a lower forecast of state tax revenues plus an unexpected increase in state aid to schools.

An $18 million influx of federal Medicaid stimulus funds will offset part of the shortfall. The 2 percent across-the-board cuts account for another $7 million.

For state agencies and aid programs, the new cuts add to 5 percent across-the-board cuts made during last November’s special session. The cuts affect the 2010-11 fiscal year.

As in the special session, some state agencies and aid programs would be exempt from across-the-board cuts. Among them are the State Patrol, child welfare, Medicaid, prisons, higher education and state school aid.

Among agencies that would face cuts are the Departments of Roads, Labor, and Health and Human Services, the Governor’s Office and the Legislature.

Aid programs, such as those helping cities, counties and other local subdivisions, were included in the proposed cuts.

Heidemann said the proposal leaves Nebraska facing a substantial budget “cliff” in the next budget period.
Most of that results from decisions lawmakers made last year to rely on federal stimulus money and cash fund transfers to balance the budget.

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