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LINCOLN — Republican Gov. Jim Pillen plans to toss his party’s right flank some red meat next year before addressing the harder politics of closing Nebraska’s projected $432 million budget shortfall.
One reason could be the potential of Pillen facing Republican primary challengers in 2026. Those could include his top 2022 GOP primary opponent, Charles Herbster.
Pillen denied “political” motivations for picking any of his top legislative priorities for the 2025 legislative session, which he announced last week and detailed in an interview Friday. But all four policies are likely to be popular with the GOP base that typically decides races for Nebraska governor.
Echoing themes from his 2022 campaign and speeches around the state, he said his four goals for the session would benefit Nebraska’s “kids, taxes, agriculture and values.”
“Those four words, there’s a lot of opportunity to make a difference along,” Pillen said of the upcoming session, set to start on Jan. 8. “That’s what guides ’25.”
Governor’s priorities
He outlined those goals in a Dec. 1 statement and clarified them during the pre-session sit-down. Some highlights: He is trying again on legislation to restrict participation in middle and high school sports and use of school bathrooms and locker rooms to a student’s sex at birth. He signaled that he would like the legislation to cover college sports as well.
He is pushing again for structural changes to how the state funds K-12 education to address property taxes, including revamping the state aid formula for K-12 schools. He says he plans to pay for any increased costs by broadening the number of services subject to the state sales tax.
He seeks a law banning the sale of lab-grown meat in cattle-ranching Nebraska. He already established this approach with an executive order in August banning state purchases of lab-grown meat.
And he aims to shift Nebraska to winner-takeall in awarding Electoral College votes in presidential elections, hunting for a 33rd vote to beat a certain filibuster.
What Pillen didn’t highlight
Missing from the priorities was closing the state’s projected $432 million budget gap, which was largely driven by Pillen’s previous tax-cut and tax-relief changes. Another contributing factor is more spending than the governor’s budget shows, an Examiner analysis indicates.
Pillen highlights his first two years of spending increases as being fiscally conservative. He cites budget documents listing the increases at 3.9% in fiscal year 2023 and 1.9% in fiscal year 2024.
But a review of two decades of state budgets shows Pillen’s team kept the spending figures lower than his predecessors’ budgets, partly by classifying some significant expenditures as budget transfers rather than direct spending.
This affects the numbers because money that is moved between funds, such as moving it from the general fund or the rainy day fund to the state’s new Education Future Fund, is classified as a transfer and not as spending, even if the money is being moved to spend on a specific purpose.
A key example is how Pillen’s administration lists a $1 billion investment in the Education Future Fund and follow-up investments in the fund as transfers. The fund is intended to cover special education costs and create a new baseline of K-12 public school aid, which Pillen has said would reduce some of the reliance on local property taxes.
Pillen’s budget numbers show that the general fund in fiscal year 2023 increased from $5.15 billion to $5.35 billion. If he had included the $1 billion in Education Future Fund spending, the general fund budget would have jumped to $6.35 billion.
If Pillen had classified the fund the same way other governors have done with similar investments, it would push the general fund annual spending increase to 23.5% in Pillen’s first year as governor. His combined two-year spending increase would be 22.5%, instead of the listed 5.9%.
By contrast, spending increased a combined 8.9% in the first two years of Republican Gov. Pete Ricketts’ administration. Previous Gov. Dave Heineman, also a Republican, increased spending a combined 9.6% in his first two years, an Examiner analysis found.
“The Education Future Fund is an investment in our kids,” Pillen said. “If somebody wants to call that spending, I don’t care. It doesn’t matter to me, but I believe in investing in our kids.”
Pillen also signed income tax rate cuts into law in 2023 that were projected to reduce revenues by $3.3 billion from 2024-2029. He and State Sen. Lou Ann Linehan of Omaha have called the cuts needed to compete better with neighboring states.
Those cuts phased in a reduction of the top income tax rate from 6.84% to 3.99% by 2027 and lowered corporate taxes. The governor’s critics say those changes risk the structural balance of future budgets. Some have questioned whether the state can afford the school spending changes Pillen wants. Sports and spaces On sports and spaces, the governor said he wants to see the next Legislature revisit the core of Legislative Bill 575, known as the Sports and Spaces Act, which fell to a filibuster in 2024.
Pillen said Nebraskans are right to want to “protect their kids” and act on their “values.” He repeated his stance that he has no ill will toward transgender kids or adults.
