Economic forecasting board lowers state revenue projections over next two fiscal years

Nebraska lawmakers were given a spooky revenue projection on Halloween, but it didn’t come as surprise to fiscal committee leadership.

The Nebraska Economic Forecasting Advisory Board revised its April state revenue projections downward by around $120 million dollars for FY2025-26, and $247 million for FY2026-27.

That means the state’s budget shortfall – which was already at $95 million following the recent legislative session – has ballooned to more than $450 million over the current biennium.

The revenue forecast is used as the basis for the Legislature’s constitutional obligation to balance the state budget. A state statute calls for an additional 3% reserve to be included.

Policy changes from the "One, Big Beautiful Bill Act" are the primary factor in the lower revenues.

A report from the Nebraska Department of Revenue released in September indicated that the OBBBA will cost the state nearly $217 million in revenue over the next two years.

Projected sales tax receipts for FY2025-26, however, were up by $60 million from their April projection.

“Really all the changes we're talking about here in the forecast is policy, not the economy in Nebraska,” said board member Matt Miltenberger. “If anything, as we heard, because of the sales tax receipts, investments are happening.”

Revenue Committee Chair Brad von Gillern said that’s a good sign for the health of the state’s economy.

“The one that I look at more than anything, is the sales tax, as far as a trend for consumer confidence and spending, and out of the last four months, three of them have exceeded the forecast,” he said. “I see those as a positive indicator.”

Gov. Jim Pillen weighed in on the new projections with a statement signaling his commitment to running government like a business.

“The forecasting board’s projections underpin the critical work of cutting government spending and identifying efficiencies while we improve services,” he said. “Earlier this year, I announced our effort to deliver $500 million a year in cuts that will directly benefit hardworking Nebraskans. It’s a big number, but it's necessary as we work to fix the broken property tax system, end special interest carve outs and exemptions, and balance our budget.”

The 2026 Legislative session is set to begin Jan. 7, while the next Nebraska Economic Forecasting Advisory Board meeting is scheduled for Feb. 27.