If no deal is reached to avert a fiscal cliff, state and local governments could be forced to make tough budget decisions.
Congressional leaders are scheduled to meet through the weekend to discuss the fiscal cliff. If an agreement isn’t reached by Tuesday, a combination of tax increases and 10 percent across-the-board spending cuts will take effect.
Open Sky Policy Institute executive director Renee Fry says federal funding makes up 34 percent of Nebraska’s total spending, so cuts could be devastating. “I don’t think a lot of people probably understand that quite a bit of federal spending goes to K-12, goes to higher education, goes to public safety, goes to roads, to health prevention and aging services, and services for veterans, things like that. And those are things that are on the table right now.”
Jim Vokal, executive director of the Platte Institute for Economic Research, says the spending cuts will affect more than 1,000 programs ranging from education to defense. “So as we look at the fiscal constraints that Nebraska is facing with their budget, limiting, for example, that federal income coming for education, that’s going to put more pressure on lawmakers to look at raising taxes.”
The Congressional Budget Office estimates 3.4 million people could lose their jobs in 2013 without action by federal lawmakers.
Earlier this week, Senate Majority Leader Harry Reid said it appeared likely the fiscal cliff would happen. Income, estate, capital gains, and alternative minimum tax increases are among those scheduled to take effect Tuesday.