January, 2017
Lincoln -- Nebraska has formidable budget challenges in the coming biennium. Many of them are a result of three dollar corn and wheat, and a weak agricultural economy that has no end in sight.
Part I of this post suggested paying for overdue corrections and human services bills, run up by misfeasance in previous administrations, with a new revenue stream from increases in so-called sin taxes. This would take pressure off other areas of the budget. It should include a tax on soft drinks, the reduced consumption of which would help keep Nebraskans healthier (and help hold down future government spending on health care).
Part I of this post also noted structural issues in state higher education spending. Yet cutting such spending without careful thought could be counterproductive to state economic growth. As college and university budgets are trimmed, it would be appropriate to re-invest some of these savings into areas that are closely linked to the well-being of the state's economy. One way to do this – targeting more funds to higher performing institutions – is outlined in the post "New Tool for State Higher Education Budgeting." University research and innovation doubtless need robust support as well.
But more needs to be done immediately to try to turn Nebraska's agricultural economy around. Nebraska political leaders are missing an opportunity by not pressing for soil health and conservation projects to be included in the upcoming national infrastructure rebuilding legislation. See the post "Topsoil as Infrastructure." Other states are putting together lists of projects – high speed rail and the like. Nebraska political leaders should have a long list of NRD, NRCS, Environmental Trust, and other such soil and water conservation efforts ready for inclusion in the infrastruction bill, and be ready to justify them. Such projects would provide more jobs and more lasting benefits than, say, the Keystone XL oil pipeline, yet are getting virtually no attention from Nebraska political leaders.
As for increasing grain prices, the outlook is not good. Export markets are suddenly being jeopardized by political bluster from a new White House occupant who is, at best, inexperienced in such matters and has shown no interest in farm economics. Nebraska leaders have been unwilling to push back.
There are several things Nebraska leaders could do to help grain prices. One would be to recognize that overproduction, encouraged by the current farm bill, must be curtailed. "Got to feed the world" is a slogan of those who profit from overproduction more than from any moral imperative; the damage it does is the opposite of any such imperative. Marginal lands should be taken out of production, with appropriate incentives funded in the farm bill. Grain sorghum should be encouraged as an alternative to corn; it requires fewer costly inputs to raise, requires less water, and has a potential export market to countries that do not want GE corn because of their own environmental and consumer concerns. Nebraska leaders should be working to expand these markets. Unfortunately, it's not happening.
The cold, hard facts point to a difficult biennium for the Nebraska state budget. Past mistakes have put the state in a hole in corrections and human services; the outlook for the agricultural economy is not good given unhelpful farm bills and trade upheavals; there is little sign of insightful and courageous political leadership on the horizon.
