STRAIGHT TALK: LB611 Would Protect Against Federal Funding Crisis

One bill I believe Nebraska needs is LB611. LB611 is a carry-over bill from last year. Last year the bill advanced out of the Appropriations Committee, where it also became the committee’s priority bill. The bill currently sits on General File.

LB611 would require annual reporting of federal funds received by state agencies participating in the State’s budgeting process. The report would require every State agency to create two operating plans; the first would go into effect once federal receipts drop by 10 percent and the second would be enacted once they drop by 25 percent. This kind of reporting is necessary so that the executive and legislative branches of the State government would be prepared to act in the best interests of Nebraskans should federal funding ever be reduced.

Because our country’s national debt has now surpassed $20,600,000,000, I believe this is now the next fiscally responsible step for our state to take. Because our national debt now surpasses our gross GDP, there are no longer any guarantees about the future status of federal grant monies.

Federal grants almost always come with strings attached. Whenever the federal government turns off the money spigot, the states are left holding the hose. So, federal grants put the State at the mercy of the federal government, where we are tied to their inconsistent whims.

Federal grants come with the potential to put the State into a spending crisis. In addition, states remain bound by the unintended consequences and extra costs associated with accepting federal dollars.

Besides suddenly turning off the money spigot, federal grants often incentivize unnecessary spending at the state and local level. Because some people view these federal grants as “free” money, it encourages impulsive and unchecked spending. Making matters worse, states are often unable to track how these federal dollars get spent.

LB611 would provide state officials with the opportunity to see where all of their federal grant monies go. LB611 would mandate an audit of all federal funds in the State, including a report of all the strings which are attached to these federal grants.

LB611 would also allow state officials to measure the impact of a future spending crisis. The bill would require a risk assessment to identify potential vulnerabilities so that state officials may make better decisions and plans about what to do in the event of a reduction in federal funds.

More than 30 percent of Nebraska’s budget is currently being funded by federal grants. Ninety-one percent of Nebraska’s Labor Department, for example, is funded by federal grants, while 85 percent of Nebraska’s military spending comes from federal dollars. Because I sit on the HHS committee and the Education committee, it is important to report that $2.7 billion of the Department of Health and Human Services comes from federal grants, and $580 million of the University of Nebraska’s budget comes from federal grants.

The bottom line is that LB611 will help to ensure that Nebraska would be protected against Washington’s next federal funding crisis.