Watching our Pennies
The Legislature will be navigating a $472 million budget shortfall that will eventually need to be closed in order to meet Constitutional obligations. While one more update of the forecast will occur in February, lawmakers can’t wait that long to begin examining options to balance the budget. OpenSky anticipates a revival of failed proposals considered in the 2024 regular and special sessions as well as the 2025 90-day session that would remove sales tax exemptions on various categories in order to generate additional revenue. Also, look for debate on proposals to cut budgets, especially after a mandate from Governor Jim Pillen to his code agencies to find 10% of cost savings across the board. It is important to note that cuts could have significant impact on growth and vitality in the state, and cutting programs with a strong return on investment may be seen as “kicking the can down the road” for future Legislatures. Nebraskans can expect a great deal of discussion on the impact of H.R. 1, the federal reconciliation package passed this summer, which will have many impacts on Nebraska’s budget by way of administrative costs to the state, income tax changes to which Nebraska conforms automatically and other reductions. H.R. 1 and its prioritization of high earners and large corporations will leave the body in a difficult spot, but with an important opportunity to maintain essential services like Medicaid and SNAP for our neighbors.
Watching the Clock
The second session of the biennium is typically a scramble. With only 60 days to close budget gaps, conduct hearings for all newly-introduced bills, and 10 term-limited legislators trying to deliver on long-held goals and promises, time is a valuable resource. Adding to this year’s complexity are federal funding shifts, potential impeachment proceedings, a recommended expulsion, signaled frustration over decisions made by the administration over the interim regarding immigration enforcement and other forthcoming hot topics. Speaker John Arch told the body that priority bills will need to be re-designated for 2026 in order to be given priority scheduling. Traditionally, a short timeline is ripe for quick changes, strategic maneuvering and the creation of omnibus packages designed to give legislation that has not been prioritized a way forward. However, at a town hall meeting in Grand Island recently, Governor Pillen indicated his distaste for omnibus “Christmas tree” bills and promised to veto all of them.
Watching and Learning
OpenSky celebrated the formation of the School Financing Review Commission at the conclusion of last session and has been diligently following the work of the group charged with reexamining the way K-12 schools are funded in Nebraska. The Commission met their first deadline of December 1 by publishing a report outlining recent changes in school funding, level setting on knowledge of where we are and where we have been recently. The next step will be a review of various proposals to alter the TEEOSA formula, which, at its most basic level, balances the resources and needs school districts have to operate. However, the work may be interrupted by a renewed push by Governor Pillen to eliminate the formula completely and have the state assume all operational expenses of school districts, an idea that has been floated and rejected several times in recent years. Additionally, the Governor, surrounded by private school elementary students, “cannonballed” the state into a federal program designed to offer tax incentives for donations to scholarship granting organizations, despite a sound rejection of this policy statewide in November 2024. Various elements of education funding are likely to loom large over the upcoming session.
Watch us Go!
To stay up to date on the Legislative session, we invite you to follow our social media channels and make sure you are subscribed to our emails. Additionally, in the 2026 session, OpenSky will be providing weekly updates on the Dan Parsons Show podcast, which focuses on local news and policy analysis from a variety of perspectives. You also may see us at community events near you, and if you have a group that would like a briefing, feel free to email Outreach & Engagement Director Lillian Butler-Hale to discuss availability.
