LINCOLN — As part of Gov. Jim Pillen’s proposed budget, millions of dollars now devoted to restoring wildlife habitat and local recycling efforts would be diverted for new purposes: aiding campgrounds, marinas and cabins at state parks.
Pillen also would increase money transfers to a water resources fund that finances the management of water use by farmers.
All told, three pending legislative bills — two of which were introduced on behalf of the governor — would earmark nearly all of the state lottery funds now distributed via competitive grants by the Nebraska Environmental Trust.
This year, the Trust had about $26 million to distribute in matching grants. Pillen’s two budget bills would earmark $20.5 million of that money for other uses, while another bill seeking funds to combat nitrate contamination of groundwater would take another $5 million.
“It’s essentially a raid on the Environmental Trust,” said Kristal Stoner, the executive director of Audubon Great Plains and a leader of a coalition of conservation groups that rely on Trust grants.
Not the Trust’s purpose
Former State Sen. Sandy Scofield, who was working under then-Gov. Ben Nelson when the Environmental Trust was set up in 1992, said funding “outdoor recreation” and “healthy public infrastructure” — as the current governor proposes — was never considered when the Trust was established.
While cleaning up nitrates in groundwater, providing nicer cabins and marinas at state parks and preventing overuse of water resources are worthy projects, that’s not what the Trust was set up to fund, said both Scofield and Stoner.
“The idea was that the natural world needed some help, and local communities didn’t have the resources to do it — help the little guy on things that state government couldn’t,” said Scofield, president of a group called “Friends of the Environmental Trust.”
The current governor, she said, is “just madly looking at places to find money so he can fill the (budget) holes he dug last session.”
Public hearings on Pillen’s budget bills, Legislative Bills 261 and 264, are scheduled for Tuesday afternoon before the Legislature’s Appropriations Committee.
Potential changes
Reportedly, the committee has decided that the bill taking half of the Trust’s money should be debated separately and not be part of the mainline budget, because of the expected controversy. A hearing on a third bill seeking $5 million a year from the Trust, LB 638, the nitrate reduction act, is set for Feb. 25 before the Agriculture Committee.
The proposals come as the state is wrestling with an estimated budget shortfall of $432 million over the next two years. Such shortfalls usually mean cuts in spending and programs, and a search for unspent funds in state cash accounts that can be “swept” back to close the budget gap. The gap has largely been blamed on the softening of the state’s economy and lower tax revenues due to recent cuts in state income taxes.
Pillen has proposed sweeping millions in excess money from cash funds held by various state agencies, and rescinding some past spending authorized by the Legislature. Among those clawback targets: funding for a now-dead sandpit lake between Omaha and Lincoln and millions to build new marinas at state parks and a new lodge at Niobrara State Park.
Meanwhile, the governor is sticking with his pledge to reduce local property taxes, proposing to utilize $400 million in additional state funds to offset more of the taxes.
In response to a reporter’s question, the governor’s budget office said that because the Environmental Trust has not granted out all its lottery funds, its excess cash has increased from $36 million to $74 million over the past five years.
“The intent is to put these funds to work for their intended purpose,” the governor’s spokeswoman wrote in an email.
Fewer grants and applications
The Trust, in recent years, has seen fewer applications for its grants and has granted out less money. In 2023, the Trust granted out only $11 million of its available $20 million. Earlier this month, the Trust approved $15 million worth of grants for 2025 out of $26 million available.
Whether or not the millions held by the Trust can be shifted to general state purposes is unclear.
Karl Elmshaeuser, the trust’s executive director, said in an email that $62 million of the $75 million held by the Trust is “encumbered,” which means it’s already been granted to environmental groups or earmarked for spending but not yet spent or sent out.
“All (encumbrances) are subject to change by the Legislature,” he added.
The 14-member Environmental Trust Board voted recently to take a neutral stance on the bills that redirect Trust funds, though Elmshaeuser was instructed to testify about “technical and mechanical issues” raised by the proposals.
Pillen, in his State of the State speech last month, said he was shaking the “pillowcases” of state agencies to find extra funds to close the budget gap.
“To shrink government, we must eliminate its obsolete parts and clean out its closets,” Pillen said.
Governor proposals
One governor proposal, LB 264, would redefine the allowed use of lottery funds to include “outdoor recreation” and “healthy public infrastructure.” It would earmark 25% of the Trust’s state lottery proceeds for a park improvement fund held by the Nebraska Game and Parks Commission.
Another 25% of the Trust’s annual funds, under LB 264, would be devoted for the state water resources cash fund that finances projects that maintain the state’s surface and groundwater.
Those two proposals would divert half of the $20 million to $26 million a year the Environmental Trust gets from the state lottery, taking that decision away from the Trust Board, which now decides, after reviewing grant applications, which environmental projects will get matching funds. Its supported projects include planting trees, restoring silted-in reservoirs, recycling programs, and restoring habitat.
LB 261 would earmark $5 million a year in Trust funds for the state Water Sustainability Fund and $2.5 million a year for the state Soil and Water Conservation Fund, two funds now financed by general tax dollars through the Nebraska Department of Natural Resources, which manages the state’s water resources and regulates dam safety.
State Sen. Teresa Ibach, via LB 638, seeks to obtain $5 million a year from the Trust for a law she got passed last year, the Nitrogen Reduction Incentive Act. The Act had received state general funding for two years. Ibach seeks money to keep the program going using lottery funds instead of taxpayer funds.
It pays farmers to use less nitrogen fertilizer, thus preventing leaching into groundwater.
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