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LINCOLN — Nebraska Gov. Jim Pillen’s mid-biennium budget proposal drew no supporters at a public hearing Monday, with many testifiers sharing concerns about the governor’s continued reliance on cash fund sweeps to balance a projected deficit.
Both of Pillen’s mainline budget bills, Legislative Bills 1071 and 1072, had a combined public hearing before the Nebraska Legislature’s Appropriations Committee. The bills aim to close a projected $471 million deficit and, if adopted, would leave Nebraska with an estimated $125 million surplus by the end of the budget cycle in mid-2027, according to Pillen’s office.
Overall, the governor’s changes would reduce state spending by 0.4% in the current fiscal year and by 1.8% in fiscal year 2027. Across the whole of state government, Pillen proposes $495 million in spending cuts, with the largest agency reductions to the state Department of Health and Human Services, which would see a net loss of about $152 million over both years.
State Budget Administrator Neil Sullivan, speaking on behalf of the governor, was the only testifier in support of both bills, aside from two written comments in support. In comparison, the bills drew 25 opposing testifiers and more than 600 written comments in opposition. An additional three people spoke in a neutral capacity, along with seven written comments.
This is the second year in a row that lawmakers have spent much of the legislative session working to fill a large projected deficit. Sullivan maintained the governor’s position that the projected shortfalls are a result of government spending, but several testifiers offered a different take.
Craig Beck, research director for progressive thinktank OpenSky Policy Institute, argued that the repeated deficits are due to increases in transfers out to support property tax relief spending. Over the past seven fiscal years, Beck said the state’s transfers grew nearly 650%, compared to a 23% rise in general fund spending over the same period.
Former State Sen. Al Davis, representing Nebraska’s chapter of the Sierra Club, argued the deficits are linked to lawmakers’ focus on what he called “tax gimmicks,” including various sales tax and income tax exemptions, which reduce state revenues and don’t directly address the state’s property tax crisis.
Additionally, Davis said Pillen’s strategy of sweeping cash funds is an unsustainable method for balancing Nebraska’s budget. Davis was one of many testifiers who questioned the long-term feasibility of the transfers.
“Eventually there won’t be any cash funds to raid,” Davis said. “What will you do then?”
Sullivan said the Governor’s Office expanded its review to over 900 state cash funds this year, looking specifically for excess balances and cash he claimed was sitting idly.
Multiple opponents argued the proposed transfers fix a temporary budget issue but would lead to longlasting negative consequences for a variety of projects and industries across Nebraska.
