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Controlling Spending

By Governor Pete Ricketts

October 25, 2016

 

The Governor’s official photo is available here.

 

Balancing the state budget and controlling spending are fundamental to good state governance.  Just like any well-managed household, the State of Nebraska must balance our budget.  We do not spend money we do not have. 

 

This may seem like common sense, but Nebraska is unique among states for its fiscal responsibility.  This fiscal restraint has earned Nebraska high national rankings.  For example, according to Moody’s, Nebraska ranks in the top ten among states for how little debt we carry.  Standard and Poor’s gives Nebraska a perfect AAA credit rating.  This year, the Mercatus Center at George Mason University named Nebraska the second-best state in the nation for financial health when considering factors such as budget solvency and long-term financial commitments.

 

My administration has worked hard to build on this strong fiscal foundation.  In my first two-year budget, the Legislature and I cut the rate of growth in government by about half.  This restraint allowed us to deliver $408 million in property tax relief over two years. 

 

A recent downturn in commodity prices has resulted in slowing tax revenues.  Our state’s largest industry, agriculture, has seen significantly lower prices for key commodities like cattle and corn.  Economic downturns in agriculture have historically had an impact on the state’s tax revenues.  In the first quarter of Fiscal Year 2017, tax revenues fell short of projections by $42 million.  This is compounded by revenues coming in $95 million below forecast for Fiscal Year 2016.

 

To address this, my administration has taken steps to further slow state spending.  Last quarter, I reduced the money given to state agencies to cause spending restraint, and I am further reducing their allotments in the next quarter to cause additional restraint.  Two weeks ago, I put in place a travel ban on non-essential out-of-state travel and announced a hiring freeze for all non-mission critical positions in state agencies.  Additionally, all agency directors have been working on adjustments to their budgets and identifying efficiencies in agencies to prepare for the next biennial budget.

 

Right now, I am working to prepare the next two-year state budget as well as cuts to this year’s budget which I will propose when the Legislature returns in January.  These proposals will include budget cuts state agencies have identified.  In this next two-year budget, we must prioritize long-overdue investments in Corrections to help continue much-needed reform of the agency.  Additionally, I will be looking at ways to continue tax reform in the context of the budget.  The budget I propose will be balanced, it will slow growth in government, and it will not raise taxes.

 

As the Legislature and I come together to work on the next state budget, we will have to make tough choices.  This budget will be about setting priorities in the context of a difficult revenue picture.  Throughout the process, I will be listening to you, and I hope that you will share your thoughts with me on this budget as well as the upcoming session.  The best way to reach me is by contacting my office by email at pete.ricketts@nebraska.gov or by calling 402-471-2244.  I look forward to hearing from you!

 

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