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Ricketts: Limit state spending, but OK to use pandemic cash

FILE - In this Feb. 26, 2021, file photo, Nebraska Gov. Pete Ricketts speaks during a news...
FILE - In this Feb. 26, 2021, file photo, Nebraska Gov. Pete Ricketts speaks during a news conference at the Nebraska State Capitol in Lincoln, Neb. Ricketts will unveil a state budget proposal on much like the other frugal spending plans he has introduced over the years, but this time he’ll have an extra $1 billion in extra cash from the federal government and plenty of people who want a cut. (Kenneth Ferriera/Lincoln Journal Star via AP File)(Kenneth Ferriera/Lincoln Journal Star via AP File)
Published: Jan. 9, 2022 at 2:26 PM CST
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LINCOLN, Neb. (AP) — Gov. Pete Ricketts will unveil a state budget proposal Thursday much like the other frugal spending plans he has introduced over the years, but this time he’ll have an extra $1 billion from the federal government to spend and plenty of people who want a cut.

The Republican governor said he’s OK using the federal pandemic money on one-time expenses, such as infrastructure and water projects, but he doesn’t support a big bump in spending state tax dollars.

“I want to set that expectation for everybody,” Ricketts said in an Associated Press interview, as he prepared for the final session of his tenure. “Don’t be thinking you’re going to come in here and spend a bunch of money. We’re not.”

Nebraska’s current two-year state budget is projected to grow by an average of 1.8% annually, to around $9.78 billion by June 2023, according to the Legislative Fiscal Office. That increase is lower than the long-term average, which has traditionally been closer to 4%. Ricketts said he expects to “fine-tune” that current budget to account for new requests for state agencies, but will oppose large spending increases.

Ricketts gave few specifics about his priorities for this year’s session, but said he plans to focus on tax cuts, public safety, investments in the state’s natural resources and the $1.04 billion in federal pandemic money. Federal law prohibits state from using its pandemic assistance money for tax cuts, but many Republican-led states, including neighboring Iowa, have announced intentions to lower taxes using their own revenues.

And in November, a federal judge barred the U.S. Treasury from enforcing a provision of the American Rescue Plan Act that prohibited states from using their pandemic relief money to offset new tax cuts. The law steered $195 billion in flexible relief funds to states but specified that states could not use it as a means to cut taxes by using the federal relief dollars to offset their revenue losses.

Ricketts said he also will continue his push for limits on how much local governments can collect in property taxes, a move that’s endorsed by conservative taxpayer groups but certain to draw fierce opposition from Nebraska’s K-12 public schools, the biggest consumer of property tax dollars.

“There’s going to be a number of things that we want to continue to build on with regard to tax relief,” Ricketts said.

Ricketts said he will present lawmakers with two budget plans, one for routine government spending from the state’s general fund and one with recommendations on how to spend the $1.04 billion from the federal American Rescue Plan Act.

Sen. John Stinner, the chairman of the Legislature’s budget-writing Appropriations Committee, said he’s aiming to have lawmakers debate the state’s general fund budget by mid-February and the pandemic aid budget by March. Stinner said he has heard from some lawmakers who want to use the pandemic money for mental health services and workforce development programs to combat Nebraska’s labor shortage.

“One of the things we need to make sure of is that we’re not using that money for ongoing expenses,” he said.

Sen. Lou Ann Linehan, the chairwoman of the Legislature’s Revenue Committee, said she believes lawmakers will be able to enact some tax cuts out of the state’s general fund budget, as long as lawmakers limit spending from that account. Nebraska’s general fund budget has a $412 million surplus this year thanks to higher-than-expected tax collections, although critics say revenue is only up because of the billions of dollars in short-term federal stimulus money pumped into the state economy.

“It’s not normally acceptable to keep $400 million to $500 million of taxpayers’ money that we do not need,” Linehan said at a news conference on Thursday.

Ricketts said he also still plans to push for a new state prison to replace the Nebraska State Penitentiary in Lincoln, which was built in 1869. He argued that the new prison would improve safety for inmates and staffers and provide more opportunities for prisoners to get rehabilitative programming.

Some lawmakers are fervently against the idea, however, and have vowed to fight any effort to approve funding for the $230 million project.

The 2022 regular session will be the last for Ricketts, who is leaving office in January 2023 because of term limits. Ricketts said he plans to keep his focus on his work as governor until his tenure ends. He has declined to discuss his future plans.

Copyright 2022 The Associated Press. All rights reserved.