Governor says special session needed to deal with declines in state revenue

Lincoln, NE – Declines in state revenue have prompted Nebraska Governor Dave Heineman to tell lawmakers a special session will be needed to address the state's budget woes.

The national economic downturn is causing budget headaches in Nebraska. With unemployment rising, state tax revenues are falling. Net tax revenue for September was $40 million below projects, according to the state Department of Revenue, which says revenues are down 6.5% so far this fiscal year.

Governor Dave Heineman sent out a memo Wednesday to all state agencies, boards, commissions, and state senators, warning that a special session will be needed to deal with the shortfalls. Heineman also asked that new or vacant positions not be filled unless absolutely essential. He called for cuts in travel, asked that additional space or new equipment not be purchased, and said new programs, contracts, or services should not be initiated. He also told state organizations to start planning for significant reductions in current state appropriations.

Unlike some states, Nebraska isn't facing a cash flow problem and has over $300 million in the state's cash reserve. Heineman says he doesn't want to use the fund to bail out the budget, but if he doesn't the Legislature may not have the money to shield core services and agencies from cuts.