The Nebraska Legislature this week began a special session to consider $31.2 million in cuts in the $1.5 billion current fiscal budget to combat unexpected Medicaid costs.

Gov. Ben Nelson recommended the cuts and requested the special session earlier this month. He acted after the state Department of Social Services revised its estimate of Medicaid costs in the 1993-95 biennium to $135 million from $112 million. The current fiscal year began in July.

Phil Richmond, spokesman for the governor, said recent cuts in federal Medicaid funding have increased the state's costs.

"If we are going to avoid a general tax increase we need to start cutting now, asking lawmakers to cut $31 million out of the current budget, and will propose carving even more out of budgets for the next two fiscal years," he said.

The governor's proposal includes merging the Department of Personnel and the Department of Risk Managements, reducing payments for psychiatric and chemical addiction treatment, and making other selective cust.

Further mergers and changes will be considered in the next legislative session, which the release says will convenes in January.

A second special session may be held in November to deal with a recent state Supreme Court decision that may cost the state an additional $100 million in this fiscal year and next biennium. Mr. Richmond said the court ruled that the state must reimburse local governments property taxes it overcharged in the 1990-91 fiscal year.

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