March 2003      Vol. 12, No. 3  REAP HOME PAGE  A publication of the Center for Rural Affairs    
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Nebraska Legislative 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 PROGRAM DIRECTOR

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 conservative.

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 microenterprise development.
     
  • 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 in 2002.
     
  • 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 percent.
     
  • New microloans placed in 2002 totaled $835,838. Microlending programs packaged additional lending totaling over $900,000.

Please see http://crd.neded.org/micro_annual.html  for 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 proposed budget.

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.

Legislative Timeline
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 two-year budget

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 http://neon.neded.org.

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 you wish.

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.


 Contact: Jeff Reynolds, REAP Program Director at jeffr@alltel.net  or 402.656.3091 for more information.
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