Pillen vetoes more than $140 million in proposed spending, calls it ‘excessive government spending’

LINCOLN — Gov. Jim Pillen, four months after taking office, wielded his veto pen Wednesday night, redlining more than $140 million in proposed spending over the next two years by state lawmakers.

Pillen, a conservative Republican, said “we must continue to fight against excessive government spending.”

His vetoes included more than $45 million in increases for “provider rates” for Medicaid providers, $40 million for construction of workforce housing in rural and urban areas, and $10 million for a study of gun violence in low-income areas of Omaha.

Return funds to taxpayers

Over four years, the governor said his reductions would save $94.2 million in taxpayer funds, $10 million from a Health Care Cash Fund financed by settlement of a tobacco lawsuit and $87 million from the state’s cash reserve or “rainy day” fund.

He urged state lawmakers to sustain his vetoes, delivering a clear message that during a time of record-high surpluses of state funds, his proposals for tax cuts and increasing funding for public schools were higher priorities.

State lawmakers last week approved an austere budget that called for average spending increases of 2.2% over the next two years. But Pillen found areas he disliked.

“Hard-working taxpayers are demanding that their money be returned,” Pillen said in his veto message to the Legislature. 

Kids and the vulnerable targeted

“Stand up to the special interests who stand to gain from growing government spending,” he wrote, “and deliver the money back …”

The immediate reaction was one of disappointment and concern.

“On the eve of the Legislature voting on tax cuts that will primarily benefit the wealthy and out-of-state corporations, Gov. Jim Pillen targeted kids and vulnerable Nebraskans with line-item budget vetoes,” said Rebecca Firestone of an Lincoln-based think tank, the OpenSky Policy Institute.

Jeremy Nordquist, president of the Nebraska Hospital Association, said that cuts in provider rates, from increases of 3% and 2%, respectively, in the next two fiscal years, to increases of 3% and 0%, put the state’s health care system “at risk.”

“The Governor’s veto will increase costs for everyday Nebraskans and will hurt our communities by closing essential rural health care services,” Nordquist, a former state senator, said.

He said he hoped the State Legislature overrides the veto, adding that hospitals are “ready and willing to work with Governor Pillen to address the systemic workforce shortages he highlighted in his veto message.”

In his veto message, the governor noted that hospitals had record profits before and during the pandemic and that increasing provider rates “will not address” the workforce shortages in the health care industry.

“It will only provide a Band-Aid to hospitals’ bottom lines,” Pillen wrote.

State Sen. Rob Clements, the chairman of the Legislature’s budget-writing Appropriations Committee, declined to comment Wednesday night.

But another member of the committee, Adams Sen. Myron Dorn, said he was “disappointed” after the panel had worked cooperatively with the governor in crafting its budget.

The Appropriations Committee has scheduled a meeting for Thursday morning to discuss how to proceed, including whether veto overrides will be attempted.

Among the other items vetoed by the governor were:

• A child welfare rate increase of $6 million, which would replace funding previously provided by the American Rescue Plan Act. Pillen said it was wrong to replace one-time federal funds with state taxpayer funds. 
• A $7 million appropriation for a rural drinking water project in Cedar/Knox County. He said the project has already received state funds.
• $10 million each in fiscal year 2023-24 and 2024-25 for both rural workforce housing and for middle income housing in urban areas. It would avoid flooding the market with government-subsidized housing, the governor said, adding that $200 million has been invested in affordable housing in the past three years. Some business leaders and rural senators have called the lack of housing a major barrier to solving the state’s workforce shortage.
• Reduction of additional shovel ready Capital Recovery and Investment Act funds from $90 million to $70 million in 2023-24.
• Elimination of $10 million in site and building development funds to Kimball for a ground-based nuclear deterrence project. 
• A $5 million appropriation from the Nebraska Health Care Cash Fund in 2023-24 and 2024-25 and related transfers in the following three years from cash reserves for a pilot program related to childhood trauma and gun violence. Pillen said that over $500 million has already been invested in areas of east Omaha.
• Funding for additional positions in the State Auditor’s Office, for 15% salary increases for state legislative employees, and additional court interpreters and public guardians.
• Expansion of the Court-Appointed Special Advocates program that helps children in the court system.