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

Nebraska Gov. Dave Heineman outlined his state budget saving proposal Monday afternoon, saying government should respond like state families and businesses do when money is tight.

They reduce spending.

Facing a shortfall of $334 million, the state should do the same, he said.

He would do that with agency savings, transfers from the general fund, and both across-the-board reductions and specific cuts.

And he would save the state's cash reserve for the future.

The state already has drawn down $250 million, from what was a more than $500 million reserve, for the current two-year budget.

Any further attempt to use the approximately $325 million left would make future budgets more difficult, he said.

In his proposal, the governor exempted some agencies from the across-the-board reductions. They included 24-hour care facilities, the Department of Health and Human Services' child protection and safety program, special education, the State Patrol and the Department of Corrections.

Some are still subject to other specific reductions.

Sen. Lavon Heidemann, chairman of the Appropriations Committee, said the governor's proposal was a "good starting point." It's too early to tell if the committee will make major adjustments or a tweak or two, he said.

The Legislature's fiscal analysts have to comb through the proposal.

The committee will begin hearings Thursday with about 76 state agencies, which will last for about four days.

During the regular sessions, those hearings take about a month and a half. In this special session, each agency will get about 15 minutes.

Heidemann expects a lot of input from the cash-funded agencies, from which the committee generally hears little.

The governor's "shared sacrifice" extends to the approximately 30 agencies supported solely by fees. They also are being asked to cut their budgets and give the savings to the general fund budget, something that has rarely been done in the past 35 years.

These agencies include licensing boards for groups such as the barbers and engineers, check-off groups such as the Corn Board, Dry Bean Commission and Wheat Board, and large agencies such as the Department of Banking and the Insurance Department.

Check-off boards, agencies that get their funding from specific ag producers, have never been asked to turn over check-off money to be used by other programs, according to Don Hutchens, executive director of the Nebraska Corn Board.

Wheat growers already pay income, sales and property taxes, said Royce Schaneman, executive director of the Wheat Board. On top of that, wheat growers pay a self-imposed "excise tax," collecting about $1 million to promote and market their own crop, he said.

"These funds are an excise tax imposed by wheat growers on themselves to promote and market their own crop," Shaneman said.

Appropriations Committee member Sen. Heath Mello of Omaha described the use of check-off funds as money "being taken from the corn board for the governor's policy research office."

There also will be a lot of interest in what the Education Committee will do to the school aid formula to save $47 million in the second year of the budget, Heidemann said.

Education Committee Chairman Greg Adams has been listening to state superintendents since the Legislature ended in late May. They understand school funding must be part of the fix of the state budget, he said.

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But they want it to be as small a part as possible.

"The committee will look for a way to get where it needs to be in the fairest way," Adams said Monday.

Omaha Sen. Jeremy Nordquist, a member of the Appropriations Committee, said he is concerned a reduction in school aid will result in higher property taxes across the state.

Although he supports a property tax credit, the largest beneficiary of that would be out-of-state property owners, he said.

It doesn't make sense to increase property taxes for Nebraskans and give a break to out-of-state land owners, he said.

Mello said the discussion should be about the budget in 2011 and beyond, not about 2009 and 2010.

The state should be looking at job vacancies and consolidating agencies - ideas that have longer-term impacts than pulling together money from cash-funded agencies.

"The governor's budget is just treating the symptoms,' he said.

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

Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.

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