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The Legislature will begin a series of hearings with state agencies Wednesday in order to hone an $8.9 billion state budget originally proposed by Gov. Pete Ricketts, but with the Legislature's distinct stamp.

The nine-member Appropriations Committee has been working daily through the session on crafting its version of the budget, first with adjustments to the 2016-17 budget and then moving on to the 2017-19 budget that will determine two years worth of spending.

The committee wrapped up its preliminary look at the budget Thursday before leaving for a four-day weekend. The proposal will change in the next couple of months based on agency hearings, spending bills working their way through the Legislature and potential adjustments by the Nebraska Economic Forecasting Advisory Board in February and April.

The forecasting board will meet Monday to revise the general fund tax receipt estimates and revenue forecasts for the two years.

The state started out with a projected revenue shortfall of $900 million that the governor, and now the committee, had to work to resolve to end up with a balanced budget.

The current proposal contains a shortfall from the required minimum reserve of $134.7 million.

"That would be the amount that we're short that we would have to look to the rainy day fund to cover," said Appropriations Chairman John Stinner.

It could also be resolved with additional budget actions on revenue or expenditures over the two years, depending on those actions of the forecasting board.

At this time, the committee's proposal adds up to $76 million more in general fund spending than the governor's, based on two-year totals on Medicaid, child welfare aid, courts and juvenile justice, public assistance, the university and community colleges and others.

The preliminary budget would represent a 1.3 percent increase in spending over the two years.

These are highlights of the committee's proposal:

* The top four proposed significant increases in spending in the two years would be: State aid to schools ($60.4 million); Medicaid ($45 million); state employees' salaries and health insurance ($31.7 million); and Corrections staffing, programs and equipment ($23.4 million).

* The committee's increase in state aid to schools would be $27 million less than the governor's proposal. 

* The committee would leave $573.8 million in the state's cash reserve in 2017-18 and $566.6 million in 2018-19. The governor recommended leaving $503 million in the first year and $510.6 million in the second year.

* The Property Tax Credit Fund would take $221 million each year from general funds. 

The committee heard testimony Tuesday on the budget bills proposed on behalf of Ricketts. 

State Finance Administrator Gerry Oligmueller fielded questions from committee members on  use of the cash reserve and how the governor came up with school aid funding amounts and Medicaid rates. 

Lincoln Sen. Kate Bolz asked why, given the importance of having an adequate reserve in troubled financial times, the governor recommended spending the full $72 million for the Department of Corrections Reception and Treatment Center, rather than agency request that was about half as much. 

Oligmueller said it was done to recognize the full obligation of the project and its future costs. 

Renee Fry, of OpenSky Policy Institute testified she had concerns about the governor addressing the shortfall through budget cuts alone. 

"Working with the Revenue Committee, millions of dollars could be freed up by freezing or repealing various tax expenditures, including several incentive programs, various tax credits and earmarks," she said. 

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Reach the writer at 402-473-7228 or jyoung@journalstar.com

On Twitter @LJSLegislature.

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State government reporter

JoAnne Young covers state government, including the Legislature and state agencies, and the people they serve.

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