Nancy Hicks, Lincoln Journal Star
August 24, 2009

Nebraska plugged 88 percent of its budget gap for this fiscal year with federal stimulus dollars, according to a national report on state budgets.

That report also ranks Nebraska second -- behind Texas -- in its dependency on stimulus money for bridging its budget gap.

And although two Nebraska budget experts agree the report's ranking system is likely flawed, the report gave Democrats in the Unicameral new ammo in a political discussion that began last winter.

Even if the ranking isn't accurate, the state's reliance on federal stimulus funds "is still pretty startling," said Omaha Sen. Jeremy Nordquist.

Nordquist and several other Democrats on the Legislature's Appropriations Committee argued unsuccessfully last winter to use some of the federal stimulus funds for one-time projects.

Those projects would have provided new jobs and helped prevent steep budget cuts that might be necessary in two years, when the stimulus funding is gone, said Nordquist and Omaha Sen. Heath Mello.

"We have a huge fiscal mess coming down the track," Mello said Monday.

"All this (stimulus) money will disappear and we are $500 million to $600 million in the hole (in two years)," he said.

The Appropriations Committee majority took the responsible route, said Sen. Lavon Heidemann, committee chairman.

The committee used federal funds and part of the state's cash reserve fund to close the budget gap, avoiding deep cuts and tax increases.

Cutting more was the only real option if the state used the federal funds for one-time projects, said Heidemann, of Elk Creek.

"Where were they going to cut?" he asked.

The state could have frozen salaries for nonunion workers and used vacancy savings, Nordquist and Mello said.

That would have provided stimulus funding for one-time projects, they said.

"This is an old argument" and a partisan political issue, Heidemann said about the stimulus budget debate.

But he did agree there could be problems in the future -- when stimulus funding is gone.

If Nebraska isn't in an economic recovery in two years, "we will be in serious trouble," Heidemann said.

The ranking system used by the National Conference of State Legislatures is not a valid comparison, said Mike Calvert of the Legislature's Fiscal Office, and Gerry Oligmueller, the governor's budget director.

Calvert, who provided the national organization with the Nebraska numbers, said just picking out a specific budget gap number for one year is problematic because Nebraska has a two-year budget cycle.

Nebraska senators also reduced spending in some areas to pay for increases in priority areas like the $17 million for the Beatrice State Developmental Center, he noted.

It might be better to compare the percentage of stimulus funds in each state's budget, Oligmueller said.

This year, stimulus funds make up about 7 percent of Nebraska's $3.637 billion state budget.

Stimulus funds will be about 6.2 percent in the second year of the two-year budget cycle, he said.