State budget advances amid continued uncertainty

By Fred Knapp , Senior Reporter/Producer Nebraska Public Media

24 de Abril de 2025 a las 00:00 ·

Staff and members of the Appropriations Committee pose after budget advanced Thursday (Photo by Fred Knapp, Nebraska Public Media News) — Staff and members of the Appropriations Committee pose after budget advanced Thursday. (Photo by Fred Knapp, Nebraska Public Media News)

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The Nebraska Legislature’s Appropriations Committee advanced a budget proposal Thursday that would leave the state short of its legally-required reserve requirement.

Two other bills advanced Thursday would close that gap. But a revised economic forecast on Friday could open it up again.

The Appropriations Committee’s recommended general fund budget for the state would spend just over $5.5 billion in each of the next two fiscal years. Committee chairman Sen. Rob Clements acknowledged that, if the budget alone were enacted, at the end of that period, the state would fall $125 million short of it’s legally required 3% reserve. But Clements said that doesn’t account for other legislation that’s moving forward.

“Currently, the way the budget is going out, it is going to show a negative status, but there are two bills that are in process that would balance the budget,” he said.

One of those bills would decrease state contributions to a nearly fully-funded teacher’s retirement plan, saving about $80 million, and another would scale-back or end certain tax breaks, saving another roughly $50 million.

Clements said he’s pleased with the overall budget proposal, which represents a spending increase of less than 3% over the previous two-year budget.

“It's been frugal, but we did a good job of protecting necessary services. We were able to provide salary and health insurance increases for the employees, while keeping most agencies flat, but not hurting services or programs,” he said.

Committee members voted 8-1 to advance the main budget bill. Sen. Machaela Cavanaugh cast the lone "no" vote.

“I believe that the budget is a moral document and should reflect the values of our state, and I don't believe that what we are putting forward reflects those values,” she said.

Cavanaugh particularly objected to the fact that the proposal boosts the amount of state money being used to hold down local property taxes, while at the same time education funding is being restricted.

“It prioritizes reimbursing wealthy landowners over providing government services, and really just doing the work of the government," she said. "We're giving tax relief for tax we don't levy, at the expense of university and college and community college education, which is going to result in increase in tuition, which is just another form of a tax, but the governor will get his personal property tax relief, and that seems to be the only thing that matters."

Gov. Jim Pillen has said the state is in a property tax crisis and needs to prioritize reducing that burden on farmers, ranchers, homeowners and businesses.

The budget proposal now goes to the full Legislature for debate.

Meanwhile, the Legislature gave second-round approval Thursday to the teachers’ retirement and scaled-back tax break bills Clements said would help balance the budget.

Among the tax changes would be a decrease in the amount small businesses get to keep for going to the work of collecting sales taxes for the state. Currently, they’re entitled to keep 3% of the first $5,000 of taxes. The bill would lower that to 2.5% of the first $3,000. Sen. John Cavanaugh said that would cost small businesses an extra $75 a month.

“We're attempting to find revenue and balance our budget on the backs of small businesses to the tune of $75 a month per business, which I'm sure anybody here could tell you -- anybody, maybe people who have worked or ran a small business could tell you -- that $75 a month can be the difference between a month where you make money and a month where you lose money,” he said.

Cavanaugh proposed an amendment to let businesses keep 4% of the first $4,000. Sen. Brad von Gillern, chair of the Revenue Committee, said his proposal, LB650, would merely return small businesses to the system that existed until a year ago. And he warned about the effect of Cavanaugh’s proposal on efforts to balance the budget.

“The cost on this is about $5.4 million in this next biennium. So I don't disagree with what Senator Cavanagh wants to do. I don't want to do anything to injure small business… This again, LB650 takes us back to what it was a year ago,” he said.

Senators defeated Cavanaugh’s amendment, then gave the bill second-round approval on a 34-5 vote.

Friday, the Economic Forecasting Advisory Board will meet to make final adjustments to the revenue estimates the Legislature will use in balancing the budget. If, as many expect, the board reduces revenue estimates by around $100 million, lawmakers may consider other tax proposals. Among those still alive are proposals to tax pop and candy, as well as to pause corporate and personal income tax cuts approved in recent years.