Only small changes made to state budget proposal, including PTSD pilot project

Critics say that overall, the budget ‘steals from the poor’ to provide tax cuts for the rich

By: - May 3, 2023 8:44 pm
Nebraska State Capitol Building

The Nebraska State Capitol Building in Lincoln. (Rebecca S. Gratz for Nebraska Examiner)

LINCOLN — The trauma of living in north Omaha was compared to a “war zone” Wednesday during debate over the state budget, with inner-city children witnessing acts of violence and hearing sirens or gunfire through the night.

State Sen. Justin Wayne of Omaha said he realized there was a comparison after a discussion with fellow Sen. Tom Brewer, a decorated war veteran.

“My dream is that streets will not be owned by guns but by people where little children cry because they fell instead of you or one of your cousins being shot,” said Wayne, quoting an essay he wrote as an eighth grader in North Omaha.

State Sen. Justin Wayne of Omaha. (Zach Wendling/Nebraska News Service)

“A place where you are not stereotyped as a gang member or a thief,” he added.

The dramatic testimony led state senators to approve an amendment to the state budget for a pilot program to study the need for preventing post-traumatic stress disorder among children “through the reduction of community gun violence.”

Direct correlation

Wayne and others said there’s a direct correlation between children suffering from PTSD and having problems in school and later committing acts of violence. Addressing the disorder in kids could possibly reduce crime and the need to build a second state prison, they argued.

On a 28-3 vote, state lawmakers approved a two-year, $10 million addition to the budget for a PTSD study as proposed by Wayne.

It was one of only a couple of mostly minor amendments approved as state senators gave a first-round OK to the state’s mainline budget.

The budget, as proposed by the Legislature’s Appropriations Committee, calls for just over $11 billion in spending over the next two fiscal years and an average spending hike of 2.3% a year.

Highlights in the proposal include final funding for a $366 million state prison, setting aside $574 million to eventually build the long-dormant Perkins County Canal and providing $715 million for income tax cuts, increases in state property tax credits and other new spending.

There is also the creation of a $1 billion education “future fund” to provide increased state aid to mostly rural schools.

‘Stealing’ from cash funds

Critics of the budget, though, faulted the plan for “stealing” money from cash funds held by state agencies to fund programs, rather than using general state tax funds, as is typical, to cover the cost.

That, some senators said, is a technique used when state government funds are tight, not when — as is the case now — the state sits on a record surplus of tax revenue.

State Sens. Danielle Conrad of Lincoln and Machaela Cavanaugh of Omaha slammed the use of the “rainy day” funds to finance government operations. They said it was done to free up more money for tax cuts that benefit the wealthy and out-of-state corporations.

State Sen. Danielle Conrad of Lincoln. (Zach Wendling/Nebraska News Service)

“This budget is about playing politics at its worst,” Conrad said. “It’s full of gamesmanship, it is full of gimmicks, and it’s full of tricks.”

“This is literally stealing from the poor to give to the rich,” Cavanaugh said.

The personal income tax cut bill would reduce the state’s top two tax rates gradually to 3.99%. The Lincoln think tank, OpenSky Policy Institute, said that 75% of the tax cut benefits go to the top 20% of wage earners.

But Elmwood Sen. Rob Clements, who chairs the budget-writing Appropriations Committee, defended the cash fund transfers.

Transfer from needy family funds

One involved using $11 million in federal Temporary Assistance for Needy Families (TANF) to fund an advocacy program for abused children and services for victims of domestic violence.

Cavanaugh argued that TANF funds were intended to help the poorest Nebraskans survive and that state general funds should be used to finance the two programs.

She and Conrad said that a $130 million surplus in TANF was allowed to grow because lawmakers failed to expand or increase the use of the money for low-income families.

Clements countered that other states have used TANF funds for similar programs and said he doubted that the Appropriations Committee would have approved using general state funds for the two programs.

Another fund transfer involved the Nebraska Environmental Trust, which gets about $20 million a year from the State Lottery to grant out for community recycling projects, environmental research and preservation and development of wildlife habitat.

Environmental Trust funds shifted

Under a controversial proposal by Gov. Jim Pillen, $7 million a year over the next two years would be transferred to the Nebraska Department of Natural Resources to enhance flows in streams and recharge groundwater — something important to irrigators.

Omaha Sen. John Cavanaugh argued that the $14 million transfer was likely unconstitutional, defied the wishes of voters who approved the Trust, and was also unnecessary — the DNR’s water fund already has $27 million and only doles out about $4.5 million a year.

Cavanaugh called it an example of how the Trust has become increasingly politicized in recent years, rather than focused on improving the state’s environment and natural resources.

A lawsuit against the transfer  is being considered by a watchdog group, Friends of the Environmental Trust.

State Sen. Rob Clements of Elmwood. (Zach Wendling/Nebraska News Service)

A member of the Appropriations Committee, Bayard Sen. Steve Erdman, said such a transfer is constitutional until a court says differently.

Clements said that the Trust has a surplus of funds and that there is precedent for drawing Trust funds to help the Water Resources Cash Fund going back to 2003.

Cavanaugh said the big difference is that the Trust got to review and monitor the past spending by the water fund, unlike if the money is just sent to the DNR.

Efforts to block transfers fail

Both efforts to halt the fund transfers, however, failed.

Elkhorn Sen. Lou Ann Linehan, who has led crafting of the bills reducing state personal and corporate income taxes and upping property tax relief, said the state has plenty of funds to afford the tax breaks. She pointed to budget projections showing a $2 billion fund surplus by the year 2026-27.

Several senators were critical of getting the proposed budget only 24 hours before debate began on the proposal.

Lincoln Sen. Anna Wishart defended the overall proposal as focusing on needed infrastructure projects, including several focusing on water, such as funding for developing a second water source for the City of Lincoln from the Missouri River.

Much of the budget debate Wednesday dealt with the proposed construction of a new state prison and whether the budget provided enough funds for alternatives to incarceration, successfully re-entering inmates back into society and preventing lives of crime in the first place.

Nebraska has one of the most overcrowded prison systems in the country — holding about 1,500 more inmates that its design capacity. Two nationally assisted attempts to reduce the overcrowding have largely failed.

Terrell McKinney
State Sen. Terrell McKinney of Omaha. (Courtesy of Unicameral Information Office)

Omaha Sen. Terrell McKinney, who opposes the new prison, proposed an amendment that would require, as a condition for building a new prison, a trio of steps. One was that the State Penitentiary be demolished, and another was that a previously funded report on inmate classification be completed. He also called for passage of a companion bill on inmate reentry and rehabilitation.

State lacks rehab programs

McKinney said the state prison system has failed, in recent years, to increase funding for and improve rehabilitation programs or to give a high enough priority to keeping inmates from committing repeat crimes and returning to prison.

State Sen. Anna Wishart of Lincoln provided an update on Thursday about the uncompleted prison classification study.

She said that study is now expected to be done by September.

He said state prison officials have justified the new prison by saying that the State Penitentiary must be replaced because it’s in such poor condition. McKinney argued that maintenance of the State Pen had been purposely neglected to justify a new facility.

The senator was joined by Wayne and Conrad in saying that unless the state adopts criminal justice reforms and improves rehab programs, Nebraska will be faced with building another $300 million-plus prison after the State Pen replacement is opened because of the projected growth in inmates.

Conrad said Nebraska is headed in the opposite direction from other states, which have reformed criminal sentences and taken other steps to reduce prison populations and close some prisons.

“Join us in low-cost, no-cost alternatives,” she urged her colleagues, “to break the cycle of recidivism.”

In the end, McKinney’s amendment to force better rehab programs failed to pass. Later though, senators did approve, on a 29-8 vote, another, much less expansive amendment on criminal justice reform.

The mainline state budget, Legislative Bill 814, was advanced from first-round debate Wednesday night on a vote of 36-4. McKinney, Conrad, Sen. Machaela Cavanaugh and Sen. Megan Hunt voted “no.”

A package of criminal justice reforms are being discussed by the Judiciary Committee, headed by Wayne. It could come up for debate later this month.

Nebraska Examiner senior reporter Cindy Gonzalez contributed to this report.

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Paul Hammel
Paul Hammel

Senior Reporter Paul Hammel has covered the Nebraska state government and the state for decades. Previously with the Omaha World-Herald, Lincoln Journal Star and Omaha Sun, he is a member of the Omaha Press Club's Hall of Fame. He grows hops, brews homemade beer, plays bass guitar and basically loves traveling and writing about the state. A native of Ralston, Nebraska, he is vice president of the John G. Neihardt Foundation.