Dave Heineman
Neb. Gov. Dave Heineman. (AP file)

The Legislature will meet in special session, possibly beginning Nov. 4, to deal with declining state tax receipts and revise the state budget, Gov. Dave Heineman announced Wednesday.

The official call could come as late as Nov. 1, after the Nebraska Economic Forecasting Advisory Board meets Oct. 30, Speaker Mike Flood told state senators in a memo after the governor's announcement.

Heineman couldn't say how long the session might take, but it comes at a cost to the state of about $10,000 a day.

"We need to have as quick a session as possible," he said, "but they need time to have their discussion."

General fund tax receipts through Sept. 30, the end of the first quarter of the two-year budget, are below projections for the quarter by $56.8 million, Heineman said.

Gross general fund receipts for the month were $358 million, 9 percent below the forecast of $393 million.

The biggest percentage drops came in individual and corporate income taxes, according to state Tax Commissioner Doug Ewald.

The shortfall is greater than the total increase in general fund tax receipts forecast for all of fiscal year 2009-10, he said.

Heineman said he would oppose any attempt to raise sales or income taxes to solve the economic problem, but all other options to address the plummeting tax receipts -- on the spending side -- are on the table.

It's too early to address the possibility of agency layoffs, governor's spokeswoman Jen Rae Hein said Wednesday afternoon.

Tapping the cash reserve of $325 million is, "in all reality," not an option, either, the governor said.

Heineman sent a memo to state agencies, boards, commissions and senators Wednesday morning asking them not to fill existing or new vacant positions "unless absolutely essential." He also asked for cuts in travel costs, leases and purchases, and no new contracts, programs or services.

He told agencies to start planning for significant reductions in their appropriations.

"It's not going to be easy, but I believe we're up to the task," the governor said.

Lincoln Sen. Danielle Conrad, a member of the Legislature's Appropriations Committee, said Wednesday afternoon that Heineman's special session call, if even necessary, needs to be as broad as possible to allow the Legislature to look at every item in the budget. The call provides the parameters for legislative action during the session.

The governor, she said, has the ability outside of a special session -- through executive order -- to implement cost-saving strategies among agencies that answer to him.

Other budget issues could be dealt with during the regular session, in accordance with the two-year budget process, she said.

She'd like to see Heineman work with the Appropriations Committee to seek out the public's priorities before the forecasting board report.

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Nebraska Democratic Party Chairman Vic Covalt called the Republican governor's announcement of a special session a "confession" that he mismanaged the budget process last spring.

The two-year budget sailed through the Legislature without a veto, he said.

"In five months we have a crisis. What kind of leadership is that?" Covalt asked.

In May, Heineman decided to accept the Legislature's $6.9 billion, two-year budget plan as it was.

Appropriations Chairman Lavon Heidemann of Elk Creek said at the time he saw the governor's decision as a vote of confidence in the committee's work.

The budget increased state tax spending by a lean 1 percent a year during the coming two years and avoided tax increases.

It also relied heavily on more than $500 million in federal stimulus funds and the state's cash reserves.

Heineman said Wednesday his best advice has been that the economy, which reflects the national downturn, might not pick up until late in 2010 or early 2011.

Slowdowns typically hit this state later than others.

Now, unemployment is beginning to rise, he said. Some two-income households are down to one. Companies have frozen or reduced salaries, furloughed employees or shortened workweeks.

Between July 1, 2008, and June 30, more than 7,900 Nebraska employees were laid off, half of those from manufacturing.

The number of layoffs for the last fiscal year was highest in March, with about 1,600 workers affected.

Sen. Greg Adams of York, chairman of the Legislature's Education Committee, said he and school district superintendents have been concerned about the financial picture for schools, not only this year, but in the next fiscal year, with federal stimulus money going away.

The more than 250 school districts will be affected in different ways, he said.

Conrad said she would not agree to cut K-12 or higher education to balance the budget for the short term.

"There is simply nothing there to be cut," she said.

Reach JoAnne Young at 473-7228 or jyoung@journalstar.com.

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