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LINCOLN — A public hearing on the Nebraska Department of Economic Development’s biennial budget drew concerns about a proposed consolidation of housing funds.
The Nebraska Legislature’s Appropriations Committee questioned DED Director Maureen Larsen Thursday about Gov. Jim Pillen’s proposed budget changes for the department. The committee is tasked with drafting an updated budget that fills an expected $471 million shortfall.
Larsen, who worked with Pillen on the agency proposal, supported its adjustments. She highlighted particular support for restoring $15 million for the state’s Business Innovation Act — which provides seed capital for local businesses.
This adjustment reverses course on state money Pillen proposed cutting just last year. He originally proposed trims of $5 million a year and directed DED to evaluate the program’s effectiveness.
The Legislature accepted most of Pillen’s proposed cuts last year. During budget negotiations, lawmakers restored about $1.25 million a year after statewide testimony from business leaders.
Pillen’s current plan is to restore full funding for the program but source the dollars from the Unemployment Insurance Trust Fund rather than the general fund. Larsen said the program is a strong economic contributor to the state, estimating it generates over $11 in private investments for every $1 of state spending.
Larsen also asked lawmakers to approve consolidating the department’s industrial recruitment and business incentive program budgets to better allocate resources. She called this consolidation especially important as DED wraps up pandemic-era programs and “adjusts the work assignments” of employees who managed those programs.
The winding down of pandemic-era programs is part of the reason why the size of DED’s staff has shrunk by at least 26 full-time employees since September, Larsen said. According to payroll records, DED paid 112 FTEs that month. Larsen said Thursday that currently the department has 86 FTEs on staff.
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When asked about this by State Sen. Ashlei Spivey of Omaha, who sits on the committee, Larsen said DED is working to adjust its staffing levels after receiving over $900 million during the pandemic, which increased its staffing.
Most of the departed staff voluntarily left DED after being recruited elsewhere, Larsen said, and the department has chosen not to fill some of the open positions. She said DED currently has 13 open positions, noting that vacant job postings expire after 90 days under Pillen’s direction.
Aside from Larsen’s testimony, the committee heard from several testifiers who opposed Pillen’s proposal to consolidate the Rural Workforce and Middle Income Housing Investment Funds into the Affordable Housing Trust Fund. Over $3 million between both funds would be transferred under the governor’s plan.
Larsen said this consolidation would simplify operations for DED staff, who currently have to code the funds from three different “buckets.”
However, opponent Phillip Henderson said the different funds are meant to serve different purposes, arguing that workforce housing is different from affordable housing.
“When we blur that line, we don’t fix housing, we break it,” Henderson said.
Another opponent Jewel Rodgers, the current Nebraska State Poet, noted that an affordable housing project in North Omaha she’s part of was denied funding from the Affordable Housing Trust Fund, but was approved for funding under the Middle Income Housing Investment Fund.
Rodgers said eliminating two of the state’s housing funds threatens to undo a lot of the statewide progress that has been made in affordable housing. Buey Ray Tut, CEO of the nonprofit Spark, which works on community revitalization efforts in Omaha, said the transfer would water down the potency of all three programs.
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