On the heels of record federal funding flowing into Nebraska over recent years, the Legislature voted Wednesday to override the Governor’s line-item veto and provide additional funding to the State Auditor’s Office for new staff members and salary increases.
In floor debate, supporters of the override vote said the auditors’ work helps to ensure that state and local governments are acting as good stewards. Last year, the Legislature made historic allocations of $1.04 billion from the American Rescue Plan Act (ARPA) State Fiscal Recovery Fund.
The veto override adds back $849,000 in funding over the next two years as the State Auditor’s Office reviews how ARPA funds have been appropriated and spent.
Other vetoes sustained
On the same day that Gov. Jim Pillen signed bills including historic income tax rate reductions and property tax breaks, his line-item vetoes that pulled back additional funding for the state’s health care system and for workforce housing withstood override votes.
The 2% Medicaid payment rate increase in FY 24-25 for hospitals, nursing homes and other health care providers represented the biggest chunk of the vetoes outlined by the Governor last week. In all, the vetoes targeted nearly $108 million in spending over the next two years, a fraction of what the state committed to tax cuts in the next biennium as part of property tax breaks in LB 243 ($179 million) and income tax rate reductions in LB 754 ($379 million).
Those tax cuts to be phased in over time will cost the state over $5 billion in revenue in coming years, reducing the funding available to invest in programs that all Nebraskans rely on.
Medicaid provider rates will increase 3% next year, but the $15 million vetoed in FY 24-25 and years to follow add to the challenges facing hospitals and nursing homes, especially in rural areas of Nebraska, amid staff shortages and ongoing inflation.
The vetoes included $40 million from the Cash Reserve Fund for workforce housing programs across Nebraska, which the Legislature had previously supported as an investment in helping to address the state’s critical shortage of workers.
Later veto override votes failed to reinstate allocations for court interpreters and district court operations, for increasing salaries of Legislative staff members, court-appointed special advocates and housing for pregnant and parenting homeless youth.
In some cases, the Governor or senators identified alternative funding sources outside of the state’s General Fund budget.
In his veto letter, the Governor said he identified spending cuts to balance the state’s budget in a year of record surpluses. The cuts to investments in a healthy Nebraska portend difficult decisions down the road when revenues committed to tax cuts could make it difficult to sustain commitments to education funding and priorities such as good roads and public safety.