Nebraska policymakers share how state funding shifts could impact their budgets

Gov. Jim Pillen has a goal of cutting 10% from the state’s general fund in the upcoming year, which would amount to around $500 million in cuts.

At OpenSky Policy Institute’s Fall Symposium Thursday, Pillen’s policy research director Kenny Zoeller said the ambitious plan comes following years of unprecedented growth in general fund receipts, which includes corporate income tax, individual income tax and sales tax.

“It took us eight years to go from $4 billion to $5 billion [in general fund receipts],” Zoeller said. “But then something happened, and that something was COVID. And then it took us one year to go from $5 billion in general fund receipts to $6 billion, and then two years to go from $6 billion from general fund receipts to $7 billion.”

Zoeller said the data he laid out shows that Nebraskans are taxed too high and said cutting spending could help that money go toward property tax relief.

Property taxes are levied at the local level, with the lion’s share, around 60%, going toward K-12 school districts. Cities and counties also receive funding from property taxes, as well as airport authorities and natural resources districts.

Eric Garcia-Mendez, who serves on the Grand Island Public Schools Board of Education, said it’s a common misconception that school districts make property valuations. That role belongs to each county’s assessor.

“We have no say in terms of what valuations look like, but we do have a say of what does the levy look like in terms of how much do public schools then use up,” Garcia-Mendez said.

Last summer, Pillen said he wanted the state to take over funding of K-12 schools, a move that would significantly reduce local property taxes.

According to the Nebraska Department of Revenue, more than $3 billion in property taxes currently goes toward K-12 funding.

Garcia-Mendez said local control, or the authority and autonomy of local officials to make decisions instead of the state or federal government, is the best approach.

“Local control is a huge issue,” he said. “Something that we try to push in terms of having our state legislators understand is that public schools, city councils – we understand our local needs of our community the most.”

Garcia-Mendez said Grand Island Public Schools has seen a recent increase in state funding, but said uncertainty around valuations and levy amounts concerns the public.

“It's probably not at the level that I think you're going to satisfy everybody, but I think it signals something, especially to local school districts, that we're actually getting some more funding from the state,” he said.

The newly created Nebraska School Financing Review Commission has been tasked with recommending changes in how the state pays for schools.

The Nebraska Legislature passes a state budget every other year during its 90-day sessions in odd-numbered years. In even-numbered years, like 2026, the Legislature convenes for 60 days and can make adjustments to the budget it passed the previous year.