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LINCOLN — With just a few days left before Nebraska’s Appropriations Committee is set to finalize state budget adjustments for floor debate, lawmakers hit an impasse while debating biomedical research funding for the University of Nebraska Medical Center.
Gov. Jim Pillen initially proposed cutting all funding slated for the Nebraska Tobacco Settlement Biomedical Research Fund, equating to a $16.15 million reduction over Nebraska’s two-year budget cycle. State Sen. Rob Clements of Elmwood, chair of Appropriations, said the governor’s team recently amended the proposal to a $12.15 million reduction, focusing on cutting dollars that would go to UNMC.
The remaining $4 million would be split between Creighton University and Boys Town. Part of the justification for the proposal is that UNMC is expected to receive more than $130 million in hospital assessment funds.
The latest proposal is effectively the same as what Pillen proposed last year, when he recommended the state remove all of NU’s $11 million share of that settlement research fund. The proposal would cut $1.15 million from the fund for the current fiscal year, and cut $11 million from the next.
The suggested cuts prompted heavy opposition last year and again this year from supporters who argue the fund does a lot of good for Nebraska, both in its research and its ability to recruit talented professionals to the state. The University of Nebraska has used some of its allotment as seed funding to enhance grant proposals to the National Institutes of Health.
“I think that’s one of the wisest investments we’re ever going to make as we compete with other states across the country to be able to have … very intelligent people relocating to Omaha and doing cutting edge research,” said State Sen. Rob Dover of Norfolk, who sits on Appropriations. “We’re not just cutting some money that’s spent. We’re cutting money that gets a big return in growing our state.”
The Appropriations Committee has met every day for the last week to debate specific budget adjustments with the goal of filling a projected $471 million budget deficit. While the deadline to get the committee’s budget proposal to the floor is March 9, Legislative Fiscal Analyst Keisha Patent said the group’s last meeting may be as early as Friday to give her office time to compile the full report.
The committee’s preliminary budget released earlier this month lowered the projected deficit to approximately $344 million. As of this weekend, Patent said further adjustments have lowered the shortfall to about $283 million.
The biomedical research funding is held in Nebraska’s Health Care Cash Fund. Pillen’s proposal would replace the cut funds with other services that would normally be financed through general funds, such as $18.5 million to cover Nebraska’s obligations to state wards.
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State Sen. Machaela Cavanaugh of Omaha, another committee member, took exception with this approach, arguing it’s “enormously problematic” for the governor to try to eliminate legislative programs for what is essentially a funding shift.
Patent noted that the settlement fund has underspent its total allocation in the last two fiscal years, to the tune of about $2 million to $2.5 million each year. Cavanaugh said that could be because Pillen has threatened its funding.
State Sen. Christy Armendariz of Omaha, another committee member, made a successful motion to cut $1.15 million from the settlement fund this fiscal year. But her separate motion to cut the $11 million next year failed in a 3-6 vote.
Tuesday’s discussion led to Cavanaugh questioning her fellow committee members about their budget philosophy, arguing that lawmakers have put too much energy into pushing for property tax relief that has now contributed to the state’s financial struggles.
“We are nickel and diming everything in this state for rich people,” Cavanaugh said.
Cavanaugh mentioned that early in this year’s session, despite the looming deficit, the committee agreed to funnel another $18 million into property tax relief. Though some committee members noted that they still have time to undo that transfer, Cavanaugh said she doubts that will happen.
Dover said while he understood Cavanaugh’s points, he doesn’t believe going back on property tax relief is the answer. He said the state of Nebraska is a business, and it needs to be able to attract new businesses and new residents to survive.
Armendariz argued that property tax relief should remain a priority, because Nebraska’s highest income earners contribute the largest amount of tax revenue to the state. And, unlike some low-income earners, wealthier residents can afford to move out of Nebraska if it no longer benefits them.
“When they are the ones that are saying ‘You’re squeezing us too much,’ we have to listen,” Armendariz said.
State Sen. Myron Dorn of Adams, another committee member who voted against Armendariz’s motion, said he was open to taking additional dollars out of the settlement fund, just not the full $11 million.
Dorn suggested holding the proposal to the end of the group’s meetings so the committee can see how much money is needed to balance the budget, though he acknowledged it would be a challenge considering the time crunch.
“We have a lot of things to wait for last,” Dorn said.
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