LINCOLN — Property tax payers and college students could wind up footing the bill for closing Nebraska's budget gap.
A large share of budget-cutting ideas proposed by state lawmakers Thursday would, if passed, force colleges and local governments to make difficult decisions.
Cities, counties, school districts and natural resources districts would have to choose between raising the state's most unpopular tax or axing jobs, services and programs.
Public colleges and the University of Nebraska would have to consider whether to increase tuition and fees or chop away at academic, service and research programs.
But Speaker of the Legislature Mike Flood of Norfolk said Nebraskans will be looking for agencies to reduce spending, not raise taxes or other costs.
“Everybody has to cut,” he said. “Hard problems have tough solutions.”
The legislative report lists options for whittling down state spending by about $400 million per year — more than the Legislature's original $340 million target.
Flood said inclusion on the list does not mean a proposal has the endorsement of the Legislature, or even the committee that made the proposal.
Rather, the report lists options for discussion as the Legislature seeks to close a projected two-year $986 million shortfall for the budget period starting July 1.
Lawmakers will have these options, as well as agency budget proposals and the governor's budget recommendations, to consider as they tackle the task.
Options would have to be introduced as legislation, have a public hearing, clear a committee vote and then three votes by the full Legislature to become law.
“It's a 2,000-piece puzzle. No one's expecting the puzzle to be solved today,” Flood said.
Many items drew immediate howls of protest.
But the effort won praise from Gov. Dave Heineman, who said he will review the report as he develops his budget.
The largest item in the list is a proposed $134 million cut in the biggest single state expenditure: aid to K-12 schools.
John Bonaiuto, executive director of the Nebraska Association of School Boards, said it's hard to know how individual districts would be affected.
But he said some districts could see state aid drop by 15 percent to 20 percent — or more.
Reductions would be funneled through the school aid formula, which is based on numerous factors such as local resources, enrollment and the socioeconomic makeup of a district's students.
“There's so much uncertainty,” Bonaiuto said. “I don't know what it's going to look like when the numbers come out.”
Raising property taxes to replace state aid is an option for schools, except for those whose property tax rates are at or near the state-imposed limit. The cap is $1.05 per $100 of assessed valuation, not counting property taxes for bond issues and other exemptions.
Bonaiuto isn't optimistic the Legislature would allow school districts to exceed the state property tax cap to replace the lost aid, as it has done before.
Dennis Pool, assistant superintendent of the Omaha Public Schools, said the Omaha district would be affected as well by a proposal to end the state's $3 million annual contribution to the district's pension system.
Pool called it unfair to exclude only OPS teachers from state contributions to public school teacher pensions, because the money comes from all Nebraska taxpayers, including Omahans.
Squeezing county budgets enough to avoid property tax increases would be very difficult, said Larry Dix, executive director of the Nebraska Association of County Officials.
Counties have been making cuts for the past three years and would struggle to absorb the proposed loss of state aid — especially if, as proposed, they also had to cover the cost of county court employees and potential increases in general assistance caused by cuts in state programs for low-income people.
“It isn't as if county government has been out there spending like crazy,” Dix said.
Representatives from the cities and the NRDs raised similar concerns.
They said proposals to cut state aid and take away state support for other programs, such as storm water management or soil and water conservation, would put local governments in a bind.
“We'll volunteer to sit down with the state senators and work something out,” said Dean Edson, head of the Nebraska Association of Resources Districts.
Higher education officials, meanwhile, said they hope to avoid raising tuition to replace state support.
NU President J.B. Milliken said the impact of the proposed $49 million reduction would be significant, especially when NU is involved with several projects that are beneficial to the rest of the state.
He said it was too early to tell what the university would do if state aid were reduced, but noted he hopes “we can continue to offer a very reasonable education.”
Stanley Carpenter, chancellor of the Nebraska State College System, said his office hasn't developed a plan yet for dealing with cuts he said would be “truly difficult, if not devastating.”
“I understand just how difficult circumstances, economically, the state is in and we want to be good partners,” he said. “At the same time, we don't want to raise tuition to the point our students can't afford to go here.”
But many agencies and aid programs have no alternative sources of funding available.
Advocates already are gearing up to argue for softening the blow on particular programs or groups.
Eliminating services that keep elderly and disabled people in their own homes could mean more people winding up in nursing homes at a greater expense to the state, said Mark Intermill of AARP Nebraska.
“What's disheartening is we've made a lot of progress in Nebraska in reducing Medicaid expenses for people over 65,” he said. “Now we're looking at getting rid of the less expensive services.”
World-Herald staff writers Emily Nohr and Paul Goodsell contributed to this report.
Contact the writer:
402-473-9583, martha.stoddard@owh.com
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