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2018 State of the State

Nebraska Gov. Pete Ricketts delivers the State of the State address on Wednesday in the legislative chamber. 

Gov. Pete Ricketts' budget proposals earned compliments Wednesday, for priorities that would cover the costs of child welfare needs, and tackle crowding and understaffing in the state's prisons.

Some senators were unsettled, however, about higher education cuts he proposed.

The Legislature's Appropriations Committee will dig into adjustments to the $9 billion 2017-19 budget beginning Tuesday, with its own reviews of the funding needs of state agencies and education.

The committee's budget recommendation is due to the full Legislature on March 9. 

While Ricketts has proposed more funding in critical areas, he's also asked for cuts across the board of 2 percent this year and 4 percent next fiscal year. He will address a $173 million revenue shortfall by reducing spending, transferring money from cash funds and pulling $108 million from the state's rainy day fund. 

Ricketts' proposal would bring added spending down to 0.2 percent. 

Longtime lobbyist Walt Radcliffe called Ricketts' State of the State proposals "the right speech at the right time."

Omaha Sen. Bob Krist, himself a candidate for governor in 2018, said what was seen Wednesday in Ricketts' budget, on the surface, looked "reasonable." Even so, he didn't like the idea of taking so much money from the state's savings. 

"It doesn't seem to me to be the right thing to do," he said. "It needs to be whittled down."

Appropriations Committee Chairman John Stinner of Gering said the committee and the Legislature will examine Ricketts' proposed across-the-board agency and higher education cuts to measure the impacts, calling them short-term decisions that have potential long-term implications. 

He was cautiously optimistic about the use of the rainy day fund to help balance the budget. Under the circumstances the state finds itself in, he said, it would not bother him to spend down the state's reserve to $274 million.

The reason for a cash reserve is to cushion the state when revenues come in below forecast, Ricketts said. "And that is certainly where we’ve been for the last more than a year."

The governor plans to get the rainy day fund back up to about $500 million by 2021, as the economy improves. 

Proposed cuts to higher education could set up an interesting discussion among Appropriations Committee members. 

Lincoln Sen. Kate Bolz is worried about the impacts of across-the-board cuts to the University of Nebraska of nearly $35 million more over two years, added to $13 million in reductions already in this year's plan.

Ricketts said the university was treated "fairly well" in the last budget. It took a 2.3 percent cut, was kept flat in the first year of the current budget, and got a $10 million increase in the second year.

University of Nebraska officials declined to comment on the budget recommendations Wednesday.

The university is a $3.9 billion economic driver for the state, Bolz said, and that is worth serious consideration, including the potential impact from cuts on tuition rates, which are going up 8.6 percent over two years and could go higher. 

Cuts to state colleges were the concern for Appropriations Committee member John Kuehn of Heartwell. 

"I have grave concerns about what a 2 and a 4 percent cut will do to the overall viability of the state college system," he said. "It's a small amount of dollars but it's a big impact on their already bare-bones operation."

The state colleges serve a significant role in workforce development in the state and should not be ignored, he said.

The University of Nebraska got special treatment in the last budget, Kuehn said, and has more levers to pull and options for making adjustments than does the state college system.

One of Ricketts' priorities for increased funding was the Department of Health and Human Services' child welfare system. He is recommending an additional $35 million for child welfare and public assistance over this year and next.

The state has seen a significant increase in the number of children coming into the child welfare system, the governor said. Annually, the number is up about 9 percent, or about 485 kids. At the same time, the rate at which cases are being closed is relatively flat. 

"That is heartbreaking," Ricketts said. "We must take care of our kids."

Significant increases have also been recorded in payments for adoption assistance and guardian subsidies. 

The department reports that in the first seven months of 2017, parents using methamphetamine were a factor in one of every three removals of children from their homes.

"We have to get to the bottom of this disturbing trend and all of the other contributing factors," Ricketts said. 

He's forming a new child welfare task force to determine the root causes of the growth in the number of children coming into the system. Spokesman Taylor Gage said the details of the task force will be finalized in coming days. 

"I think we're all puzzled about what utilization is, what this population is and what's causing it," Stinner said. "I think the governor is prudent in putting together that task force."

Bolz is proposing a special oversight committee of child welfare, especially in light of a state inspector general's report on sexual abuse of state wards and children adopted from the system. 

Another priority this year is the Department of Correctional Services. 

Ricketts is recommending expanding the number of corrections officers and reinvesting $6 million in unspent funds back into the prisons. 

Twenty-six full-time positions were funded for the 2017-18 fiscal year, even though 55 were requested. The Department of Correctional Services is asking to fill the rest of that request. It also wants to hire 35 new health services positions at Tecumseh State Correctional Institution. 

Those positions would not require more money, only permission to spend money on the positions already in the department budget. 

Corrections would also use $6.5 million in savings from another project to add a 100-bed dormitory at the Nebraska State Penitentiary.

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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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