- Associated Press - Wednesday, April 26, 2017

LINCOLN, Neb. (AP) - A new state budget bill won first-round approval from Nebraska lawmakers Wednesday despite a lingering dispute over funding for family planning services.

The measure advanced Wednesday night on a 36-1 vote after more than eight hours of debate.

Some senators criticized language they said would allow the Department of Health and Human Services to withhold funding from Planned Parenthood and other family planning services that offer abortion referrals and information.

The issue remained unresolved Wednesday night, but Speaker of the Legislature Jim Scheer said advancing the bill would give lawmakers more time to work on a compromise.

“This is the most important bill we will have in front of us this year,” Scheer said. “It shouldn’t be handled flippantly.”

The vote came hours after a state board lowered its revenue forecast for what remains of the current fiscal year and the next two. Lawmakers will have to come up with another $50 million to balance the state budget, based on the estimates from the Nebraska Economic Forecasting Advisory Board.

The state’s general fund is now projected to collect nearly $8.5 billion in the upcoming two-year budget, which covers expenses from July 1, 2017, through June 30, 2019.

The updated estimates will force lawmakers to cut more, dip again into the state’s rainy-day fund or pass a law that would temporarily lower the minimum amount of money lawmakers have to keep in the general fund, said Sen. John Stinner, the committee chairman.

The rainy-day fund had been projected to reach a record high of $729 million in June 2016, but is now expected to slip to $379 million by June 2019 because senators have repeatedly used it.

“It’s not a disaster, but it is another hurdle,” Stinner said.

Lawmakers also could raise taxes, but such an approach is unlikely to pass with a conservative-dominated Legislature and Republican Gov. Pete Ricketts opposed to any increases.

“Clearly, additional spending reductions are required,” Ricketts said in a statement.

Lawmakers faced an unusually large projected shortfall this year in part because of falling commodity prices that hurt agriculture, the state’s largest industry. Because of the slowdown, state spending is projected to outpace revenue.

Forecasting board members offered differing views on the state economy. Members from Nebraska’s larger cities offered a positive outlook, while rural members warned of a struggling farm economy.

“Things are a little challenging out there” in rural Nebraska, said board member Fred Lockwood, of Scottsbluff.

Board member David Ochsner, of Nelson, predicted that the state farm economy might remain stagnant unless another part of the world is disrupted by a weather disaster.

But board member Thomas Henning said the economy in the tri-cities of central Nebraska - Grand Island, Kearney and Hastings - is thriving. Henning said the area is still struggling to meet the need for affordable housing and a skilled workforce.

“There are a lot of good things happening. … Hopefully what’s happening in the cities can offset what’s happening in farm economies,” he said.

Nebraska’s economy is also growing unevenly, which is affecting tax collections, said Hoa Phu Tran, a Nebraska Department of Revenue economist. The state economy used to rely heavily on producing goods, which are often taxed, but it now depends more on services, which aren’t taxed as frequently, he said.

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Follow Grant Schulte on Twitter at https://twitter.com/GrantSchulte

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