Legislature gives first-round approval to main budget bill

By Fred Knapp , Senior Reporter/Producer Nebraska Public Media

May 6, 2025, 5 p.m. ·

The Nebraska Legislature debating Tuesday (Photo by Fred Knapp, Nebraska Public Media News) — The Nebraska Legislature debating Tuesday. (Photo by Fred Knapp, Nebraska Public Media News)

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The Nebraska Legislature began debate Tuesday on the state budget for the next two years, considering whether the state should defer major capital projects in order to avoid other cuts.

What’s at stake is spending of about $11 billion over the next two years proposed by the Appropriations Committee. Sen. Jason Prokop, a member of the committee, described the proposal.

“What this budget does is responds to the moments we're in and balances our checkbooks, while keeping a modest reserve, and does all of this in the context of declining revenues and high pressure to deliver on property tax relief," he said. "This budget reflects the reality of governing and the hard work that comes with making choices."

Sen. Dave Murman supported the proposal, which is about half a percent per year above current spending levels.

“It's only a decrease in the increase, but with inflation continuing, that will eventually reduce the size of government," he said. "And when I ran four years ago, one of my top two priorities was reducing taxes, especially property taxes, and at the same time reducing the size of government. So I think this bill does an adequate job of doing that."

Sen. Jane Raybould objected to the plan, which also involves reducing the state’s cash reserve, or savings account.

“We should be taking $100 million from the Perkins Canal, which, by the way, is at least a 15-19-year project because of legal delays. This makes much more sense in going to our cash reserve and taking $100 million from there,” she said.

The state has set aside more than $600 million for the proposed canal, which would bring water from Colorado to Nebraska.

Raybould also said the state should delay construction of a proposed $350 million prison.

Sen. Brad von Gillern objected to those ideas.

“All of these are, in my mind, easy buttons," he said. "Yes, they solve the math problem, but they all come with baggage and or they're impossible to move across the (legislative) floor."

And Sen. Tony Sorrentino said those proposals would not address the state’s need to control spending to balance its budget in the long term.

“If you have to do that, you need to start with the biggest expenses," he said. "And you need to start with the biggest annually-recurring expenses in our state. Everybody knows that's education and that's Medicaid, by far the two biggest expenses. It is not the one-time Perkins Canal project. It is not the one time building of a prison."

Sen. Machaela Cavanaugh proposed taking money away from funds designed to offset local property taxes and instead using them to increase state aid to schools, which she said would provide property tax relief. But Sen. Mike Jacobson objected to that idea.

“Everyone in this body knows that you have constituents that are screaming for property tax relief. How we can even consider such a proposal to take money out of property tax relief fund or pause it – it’s ludicrous," he said. "That idea coming into the Legislature and coming to the floor is dead on arrival."

Senators rejected Cavanaugh’s proposed amendment on a vote of 32-4.

Raybould traced the state’s budget squeeze to corporate and personal income tax cuts, championed by former Sen. Lou Ann Linehan, that the Legislature passed two years ago.

“When we introduced accelerated income tax rate reductions, I pointed out to my colleagues, these are not sustainable going into the future," she said. "And I remember Sen. Linehan was very confident that she would have the votes to get it passed, and she certainly did have the votes to get it passed, but it didn't make any sense to me as a business owner, as a person who really cares about economic growth in our state, because there was no revenue to supplant the revenue lost."

Jacobson rejected that explanation.

“This hasn't been reckless spending. This hasn't been due to tax cuts. This has been due to a slowdown in the economy and loss of federal support,” he said.

Jacobson pointed specifically to reduced federal dollars coming to Nebraska for Medicaid, under a formula that adjusts support depending on states’ growth in per capita income.

Senators did adopt one amendment Tuesday, voting 29-7 to add $600,000 over two years for the support of Special Olympics.

Tuesday’s debate centered on a budget proposal made before the state’s economic forecasting advisory board reduced its estimate of state revenues for the next two fiscal years by $190 million. The Appropriations Committee has proposed taking unexpended funds from agencies to adjust for that. Sen. Rob Clements, chair of the Appropriations Committee, said those would be considered at the next round of debate.

After eight hours of debate, lawmakers voted 37-6 to give the main budget bill first-round approval.