Session Is Underway, Budget Tops List
Nebraska legislators must balance the state's budget in
a time of declining revenue. Funds to support micro
businesses will be one of the areas to be examined. This
funding pays major dividends for the Nebraska rural
economy and should be maintained.
BY JEFF REYNOLDS, REAP
The regular session of the Nebraska Legislature began on
January 8, 2003. The budget – and corresponding spending
and taxation questions – will dominate the 2003 session.
The Legislative Fiscal Office estimates that the state
is facing a $673 million difference in projected
spending needs and projected revenue over the next two
years. As Governor Johanns pointed out in his “State of
the State” speech on January 15, this number may be
The Legislature is required to develop a budget for the
next biennium by the end of this legislative session.
This budget will cover the period from July 1, 2003 to
June 30, 2005.
Micro Enterprise Funding Is Effective Funding
Nebraska Microenterprise Development Act funds are used
by Nebraska-based programs to provide loans, training,
and technical assistance services to business with five
or fewer employees. This represents the overall majority
of Nebraska’s businesses. REAP has received funding from
this source since its inception in 1997.
The Microenterprise Development Act funds have been
significantly reduced in recent sessions. This critical
funding from the state of Nebraska has been cut in half
and currently is budgeted at $250,000 for 2002-03.
This funding paid major dividends for economic
development efforts in Nebraska. Statewide information
for 2002 shows these results:
- $432,000 in Microenterprise Development Act funds
(state funds) were multiplied 6.5 times from non-state
funds (by P’Ship Fund and practitioner match).
- In other words, the state’s investment of $432,000
was leveraged to $2,800,000 for use in Nebraska’s
- The number of jobs created as a result of
microenterprise services in 2002 increased 50 percent
over the previous year.
- 2,135 jobs were retained or created in 2002,
costing the state $202/job ($432,000/2,135=$202).
- There were 3,646 loan and training clients served
- 89 of 93 counties received microenterprise
services in 2002.
- The average loan placed in 2002 was $7,791, up 24
percent from 2001.
- The default rate on lending was less than 1
- New microloans placed in 2002 totaled $835,838.
Microlending programs packaged additional lending
totaling over $900,000.
additional data and statistics on the significant
impacts of this funding. These were compiled and
documented in the Nebraska Microenterprise Development
Act Report to the Legislature.
Governor’s Proposed Budget
Governor Johanns released his budget recommendation on
January 15, 2003. The Nebraska Microenterprise
Development Act funds were left intact in the Governor’s
This is great news, but it is important to note that the
Governor’s plan is only an opening recommendation. The
Legislature’s Appropriations Committee will submit a
budget sometime in mid-April. Bottom line: the
Governor’s plan is the first hurdle in a very long race,
but it was important to clear that first hurdle and move
to the next phase of the process.
Keep this legislative timeline in mind with regards to
setting the budget for the next two year cycle:
- January 15, 2003, Governor offered budget proposal
- February & April, 2003, Forecasting board meets to
make changes for forecasts
- Mid-Late April 2003, Appropriations Committee
sends budget proposal to Legislature
- Late May 2003, Senators and Governor approve
Advocacy Is the Next Step
REAP collaborates with many other individuals and
organizations and is a member of the Nebraska Enterprise
Opportunity Network (NEON). NEON is the trade
association in Nebraska for microenterprise programs and
offers policy and training opportunities for
microenterprise programs and practitioners. A complete
listing of microenterprise service providers in Nebraska
can be found at
REAP continues to collaborate with NEON to advocate for
this funding. Recent planning by the NEON Policy
committee developed a strategy for this legislative
session. Activities during the session will again
include key senator visits, letter and phone call
campaigns, among other items.
REAP Members Influential
It is clear that REAP members and other beneficiaries of
microenterprise programming carry the greatest voice in
advocating for this critical funding. Meetings with your
local state senator or letters and/or phone calls are
effective means for advocating.
Your personal story about your business and how REAP was
able to help is the best form of advocacy. REAP
Specialists can provide you with key statewide
statistics for use in communicating with your senator if
Demand for business development services far outweighs
the capacity in Nebraska. The Microenterprise
Development Act funds are critical to maintain adequate
services and to continue successful startup and
expansion of businesses in this great state. These funds
are a potent, cost effective, economy growing tool that
must be used to their fullest in these uncertain times.
By working together we can keep these vital funds in
place. Microenterprise development is a core service in
Nebraska, and a service that must carry on and continue
to grow in Nebraska.