Nebraska lawmakers endorse $575 million Perkins County canal project

Nebraska lawmakers endorse $575 million Perkins County canal project

Thursday, May 4, 2023

Martha Stoddard

May 4, 2023

LINCOLN — Plans to build a $574.5 million canal-and-reservoir system to draw water from the South Platte River got a vote of approval from Nebraska lawmakers Thursday.

Senators rejected a proposal to scale back the canal project, with 32 senators voting against that proposal and only 11 supporting it.

The vote came partway through the day’s debate about the second bill in the state budget package. The bill authorizes transfers of money to and from the state’s cash reserve fund and other funds. It eventually cleared first-round consideration on a 35-0 vote.

Under the transfer measure, Nebraska would set aside $574.5 million from the cash reserve fund to build the so-called Perkins County Canal, which would start in Colorado and bring water into southwest Nebraska.

Under a century-old compact with Colorado, building the canal would entitle Nebraska to 120 cubic feet per second of water from the South Platte River during the summer irrigation season and 500 cfs during the non-irrigation season. The proposed budget transfer would be enough to build a canal carrying up to 1,000 cfs of water.

State Sen. John Cavanaugh of Omaha brought an amendment to keep the canal capacity at 500 cfs, matching the amount of water that the compact would entitle Nebraska to draw. The amendment would potentially save the state $125 million.

Cavanaugh expressed skepticism about the value of the canal generally, given its cost, the lengthy timeline for construction and the likelihood of litigation. He particularly questioned the value of the larger canal, saying the amount of water coming into Nebraska during wet years would be the same whether the water came through a canal or in the South Platte.

“The question is whether we should build the Cadillac or whether we should build the economy model,” Cavanaugh said.

But other senators, particularly rural ones, defended the larger canal plan. Sen. Bruce Bostelman of Brainard, the Natural Resources Committee chairman, said a larger canal would allow Nebraska to capture water and store it in the proposed reservoirs for later use.

Sen. Rob Clements of Elmwood, the Appropriations Committee chairman, said that committing the money to the canal project would show Colorado that Nebraska is serious about claiming its share of water.

Former Gov. Pete Ricketts made the project a priority during his last year in office, arguing that Nebraska could lose access to water if Colorado proceeded with plans to use South Platte water to meet the demands of its growing urban areas.

Among other transfers, the bill would move $1.25 billion from the state’s general fund into a new Education Future Fund proposed by Gov. Jim Pillen. The fund would be used to increase state aid for K-12 schools by about $305 million annually, as part of the governor’s broader school aid and tax cut plan.

The bill also would put $95.8 million from the state’s cash reserve fund toward construction of a new $350 million prison.

Lawmakers had set aside the rest of the money during previous years but held off approving construction to encourage negotiations on slowing the increase in prison populations. This year’s main budget bill includes authorization for the Department of Correctional Services to proceed with building the prison.

Sen. Terrell McKinney of Omaha attempted Thursday to require the department to complete studies of how many maximum, medium and minimum security beds will be needed in the future, along with studies of programming and staffing needs.

He offered an amendment that would tie completion of the studies to the release of some of the construction money, arguing that the state should have a clearer picture of the needs before proceeding to design and build a prison. The amendment failed on a 16-16 vote, with opponents arguing against linking the studies to the release of funds.

Lawmakers gave first-round approval to the main budget bill Wednesday. The bill would authorize $10.7 billion worth of state spending over the two fiscal years ending June 30, 2025, along with approving capital construction projects.

The transfer bill would take more than $1.2 billion out of the state’s cash reserve fund, often called the rainy day fund, for various purposes. It would leave the reserve fund with about $950 million by the end of the two-year period. That represents about 16% of annual general fund revenues.

The budget package leaves nearly $715 million available for tax cuts and other uses over the two-year period. That’s the difference between revenue projections and the spending proposal. Lawmakers have given first-round approval to two packages of income tax changes and property tax relief that would reduce state revenues by more than $870 million over the two-year period.