LINCOLN — State lawmakers advanced a controversial portion of the state budget on Thursday — $244 million in “sweeps” of state agency cash reserves — but not before adopting two minor amendments.
But the most contentious of the proposed changes was put off until second-round debate after the bill advanced on a 37-5 vote.
That contentious portion is a proposed $70 million transfer from the state unemployment insurance trust fund, the largest of the transfers.
If removed from Legislative Bill 1413 — as was proposed Thursday — it would “blow a hole” into the plan by Gov. Jim Pillen to provide interim government funding for his proposal to increase state taxes and funds, in order to lower local property taxes by 40%.
The transfer is opposed by groups representing state businesses, who pay premiums into the unemployment insurance fund to cover payments to workers who find themselves unemployed.
Business groups, and a couple of senators who owned businesses, said the money should be used only for unemployment checks and job training.
If too much of a surplus has been amassed in the UI fund, they said, it should be returned to those businesses or result in a cut or suspension of unemployment insurance premiums.
‘Not a garden variety’ fund
State Sen. Danielle Conrad of Lincoln proposed an amendment to take out the $70 million transfer on behalf of the business groups.
She and other lawyers in the Legislature argued that such a “sweep” was likely unconstitutional, given a past State Supreme Court ruling that such “trust” funds cannot be utilized for other purposes.
“This is not meant to be an employer surcharge for property tax relief,” Conrad told her fellow senators. “This is not a garden variety cash fund.”
Elmwood Sen. Rob Clements, however, disagreed. He said he has been advised that the unemployment insurance money was a state “cash” fund that can be used for other state priorities.
He added that State Labor Commissioner John Albin had testified that the UI fund had plenty of funds — $22 million — even after a $70 million withdrawal.
Conrad’s amendment failed to pass, on a 20-20 vote, but Ralston Sen. Merv Riepe, who chairs the committee that deals with unemployment insurance, called for a reconsideration of the vote, saying he disagreed with the transfer.
Riepe said that in his experience, when two attorneys are disagreeing, “you’re going to get three different opinions.”
That led to a long debate that concluded when Conrad and Riepe dropped the reconsideration, saying they were assured that a solution to their concerns would be worked out before second-round debate on the bill.
Visitors promotion, Universal Service funds
Two amendments to LB 1413 that were adopted would:
- Drop a $5 million transfer out of the State Visitors Promotion Cash Fund. North Platte Sen. Mike Jacobson proposed the change, saying that sweeping the state lodging taxes would damage local tourism promotion.
- Halt transfers of interest earned off the Universal Service Fund in June 2025. The bill had allowed such transfers indefinitely.
Omaha Sens. Machaela Cavanaugh and Wendy DeBoer argued that the Universal Service Fund should be devoted to expanding, and maintaining, broadband services in areas that don’t have high-speed internet.
The cash transfers have been generally opposed as an unusual move during times when the state is flush with cash. Raiding some reserve funds usually happens during times of budget deficits.
But Pillen administration officials have defended the transfers as a one-time effort to provide funding for state government until the new tax hikes he’s proposing take effect. They add that the cash reserve funds have plenty of funds to sustain the sweeps.
