(Lincoln, NE) Gov. Dave Heineman issued nearly $24 million in line-item vetoes to LB 321, the mainline budget bill advanced by the Legislature. While signing the overall budget bill, the Governor sought to streamline spending in several areas. The result is a budget that would limit spending growth to an average 4.3 percent for FY 2008 and 2009.

“Today I am returning $23.6 million in line-item vetoes to the Legislature with the hope that they will sustain these reductions in spending,” Gov. Heineman said. “These vetoes are necessary to streamline spending in a couple areas in an effort to produce an even better budget package.

“Over the last decade, Nebraska has experienced an average 5.4 percent growth in state spending, and a 6.9 percent increase during the last two decades. We cannot sustain these kinds of increases without impacting job growth here in Nebraska. I commend the Senators for their work, and I appreciate the spending restraint evident in this budget bill.”

In addition to vetoes in spending from the state’s general fund, the Governor vetoed $20 million in transfers from various cash funds that would be directed to the general fund, as well as a $19 million transfer that would result in an increase of the state’s gas tax. These vetoes are in addition to the $24 million general fund reductions.

Gov. Heineman said, “These transfers are unnecessary given the revised revenue forecast we received recently from the State Forecasting Board, which added an additional $40 million to projected revenues over the next two years. This veto will help restrain spending and ensure that we reserve additional funds for the future.”

An $11 million reduction in provider-rate increases is an attempt to meet lawmakers half-way in an area where the Legislature increased appropriations above the original recommendations of the Governor.

The Governor vetoed a portion of the increase for special education programs totaling $5.3 million. The budget submitted by the Governor at the beginning of the session included a three percent increase in special education funding. The Legislature increased the rate to four percent, and the Governor’s reduction would bring the increase back to three percent over the two-year biennium.

“The $183 million contained in this budget in school aid funding, along with other priorities, require us to limit new funding for other state operations, including those of the Department of Education. Even with this reduction, funding for special education programs will increase in each of the next two years.”

Also included were several recommendations to reconsider salary increases and additional staff. A veto of $1.5 million in Supreme Court and State Probation funding for salary increases over those of other state employees.

Other operational and staff-related reductions include vetoes of $1.3 million in operational funding for the Department of Education, $173,000 in funding for additional staff with the Postsecondary Education Coordinating Commission, $170,000 in operational savings at the Department of Revenue following the repeal of the construction labor sales tax, $100,000 for hiring staff for school finance litigation in the Attorney General’s Office, and $72,000 for new Foster Care Review Board staff in light of the state’s continuing efforts to reduce the number of children lingering in foster care.

The Governor also vetoed the replacement of federal funds for two programs, including $750,000 in funding for Area Health Education Centers. The new funding was intended to help replace lost federal funding, but had not been recognized as a priority for replacement by the University of Nebraska Board of Regents or the Appropriations Committee. An additional $225,000 in funding for the Equal Opportunity Commission was cut for similar reasons. The Governor left a portion of the funding for FY 2008 to give the commission time to prioritize needs in the coming years.

“I want to note that the Legislature and I are in agreement with the vast majority of the appropriations,” Gov. Heineman said. “For example, I have not made any changes to the University of Nebraska mainline budget, or the budgets of state and community colleges here in Nebraska, and I am hopeful that higher education leaders will continue to align their budgets with their highest priorities. I hope that they will continue to exercise spending restraint in future years, and resist the urge to increase tuition in order to avoid difficult spending decisions.”

Veto Letter (PDF 115k)