Debate begins on Nebraska state budget bills

LINCOLN, Neb. (AP) -- Nebraska lawmakers started debate Tuesday on a series of state budget bills that have to pass before this year's session can end.

The proposals that won committee approval would allocate about $7.8 billion for the new two-year budget cycle, which begins July 1. The Legislature gave first-round approval to two salary bills, one for state lawmakers and another for elected officials who are included in the state constitution.

The budget includes higher-than-average spending increases for higher education, state equalization aid for schools, funding for the developmentally disabled and for state employee retirement plans. It also allocates money to comply with requirements of the federal Affordable Care Act.

The state-equalization aid already has won first-round approval from lawmakers but was heavily targeted by lobbyists and school-district administrators from large and small schools. The formula divides state dollars among larger and smaller schools.

Sen. Kate Sullivan of Cedar Rapids, who heads the Education Committee, expressed frustration Tuesday with yet another attempt to change the formula. Lawmakers had reached a tentative agreement, which Sullivan said she was willing to accept, but she said larger schools were trying to grab a bigger share of the money.

"I cannot turn my back on the majority of school districts in this state for the few that are already getting the bulk of the increase," she said. "That is not what I was sent here to do, and I will not do it."

Some lawmakers are also pushing to increase the state's rainy-day fund, while others argue that the revenue should flow back to Nebraskans in the form of tax cuts. Last year, lawmakers pulled $50 million from the cash reserve to help finance a cancer research center at University of Nebraska Medical Center. That left the state with about $400 million in the rainy-day fund.

The Nebraska Economic Forecasting Board predicted last week that the state would collect an additional $125 million in personal income taxes before July 1, the start of the new fiscal year. The windfall came largely from the sale of investments and capital gains taxes amid fears that Washington's recent fiscal cliff showdown would result in an increase in the federal rates.

By law, all of that projected revenue will flow into Nebraska's cash reserve. The fund serves as a savings account to help the state pay its bills when the economy slows.

Lawmakers are expected to continue their debate Wednesday.

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The main budget bill is LB195