DALLAS --Nebraska Gov. Pete Ricketts will deliver his State of the State address Thursday, which will focus on the release of a new two-year budget and his plan to deal with a $276 million deficit in the current budget without a tax increase to deal with lackluster revenues.
Ricketts' budget adjustment recommendations, delivered to the Legislature last week, proposed $276 million in adjustments for the last six months of fiscal 2016-17 to balance this year's budget and lay the groundwork for the next two years, where the projected shortfall is nearly $900 million.
Over the past several months, the state's tax receipts have been lagging. In the last fiscal year, receipts came in $95 million below the amount forecasted by the Nebraska Economic Forecasting Advisory Board. That board then lowered the forecast in October by $172 million, ending with more than $267 million that has to be addressed this year, Ricketts said in a press release.
The $276 million in adjustments to restore balance to the budget will be achieved by reducing government spending and realigning existing revenues from other sources. The budget adjustments do not raise taxes.
"Over the past several months, I have been working with state agencies to manage their budgets in anticipation of working with the Legislature to address the gap between projected revenues and appropriations," said Ricketts in a press release. "These adjustments protect key priorities in the areas of K-12 education, the University of Nebraska, public safety, and Health and Human Services among others."
Ricketts will recommend taking $92 million from the state's rainy day fund, or cash reserve, but leaving it with more than $550 million by the end of the 2019 fiscal year.
Ricketts has also recommended recapturing about $77 million in unspent money from the budgets of agencies and offices.
Ricketts is also proposing specific reductions of $51 million and $42.4 million in across-the-board cuts, along with pulling $21.5 million from various cash funds with excess balances, and the $11.2 million in state taxes that are expected to be collected from Amazon.com sales in the next six months. The company began charging state taxes to Nebraska customers on Jan. 1.
The proposal leaves K-12 funding untouched for the remainder of the fiscal year, the governor said. State aid for public schools granted through the state's school funding formula totaled $1.2 billion in general funds and other revenue this year.
In July, Ricketts provided guidance to his cabinet and all state agencies, urging fiscal restraint. In October, he place placed a freeze on non-mission-critical hires and a travel ban on non-essential out-of-state travel. Additionally, Nebraska's State Budget Office reduced allotments, or the amount of money made available to an agency, as well as carryover appropriations for state agencies.
Ricketts said that quick action will help ensure state agencies are able to manage their budgets and absorb these reductions.
He wants the Legislature's newly formed Appropriations Committee to make the changes a priority, and to get the bills dealing with the budget, introduced last Thursday by Sen. Jim Scheer, R-Norfolk and the newly elected speaker, to the full Legislature by the first week in February.
S&P Global Ratings assigns Nebraska an issuer credit rating of AAA. The state is not an active debt issuer as the state's constitution prohibits it from issuing general obligation bonds in excess of $100,000.
