On Thursday, the Nebraska Legislature met its obligation to pass a balanced budget by Day 80 of the 90-day session.
The package of budget bills headed to the Governor’s desk outlines $5.3 billion in spending from the state’s General Fund over each of the next two fiscal years. The package includes an initial $1.25 billion transfer to an Education Future Fund created to sustain long-term commitments to K-12 education funding, including additional state support for special education.
The budget pulls $1.2 billion from the state’s cash reserve in the next fiscal year alone. Funding for two projects, $575 million for a proposed canal in southwest Nebraska and an additional $96 million for a new state prison, account for more than half of next year’s transfers from the Cash Reserve Fund. Senators are also sending $40 million to programs supporting affordable housing.
From a projected beginning balance of $2.3 billion, the cash reserve is expected to roll back to $816 million by the end of FY 23-24.
The rainy day fund is a resource for future Legislatures when faced with a budget deficit that may not be that far on the horizon.
In the 10 days that remain, the Legislature will consider additional appropriations, as well as big-ticket packages of personal and corporate income tax cuts and property tax breaks that will scale back revenues available to the state to fund the programs that Nebraskans rely upon.
The budget presents a blueprint for the next two years, but revenue decisions still to come are critical to keeping Nebraska on sound footing in the future.
Tracking debt ceiling talks
The budget is not just on the agenda in Nebraska. Negotiations over the federal debt ceiling in Washington have significant implications to cities, counties and states, including Nebraska.
House Republicans have pushed for spending cuts and new work requirements on federal aid programs in talks to raise the debt ceiling by the June 1 deadline. If the cap isn’t raised, the nation risks default that could trigger a recession.
A House proposal would cut $3.6 trillion over 10 years from the part of the budget that funds child care, schools, college aid, housing and other national priorities. That could include cuts of up to $6.7 billion in federal funding for Nebraska over 10 years, according to the Center on Budget and Policy Priorities.
In Nebraska, $6.7 billion represents the loss of the state’s entire General Fund budget for FY 23-24, plus everything that’s projected to be sitting in the state’s rainy day fund at the end of next year.
In addition, people who don’t meet a work-reporting requirement or are exempted could lose their health care, food and cash assistance. In Nebraska, 1,479 families struggling to meet basic needs, including parents who are pursuing education, could be faced with losing TANF or dropping out of school.
Check out interactive on proposed program cuts
How child tax credits work
Registration is open for an online panel discussion on how cash assistance policies can enhance child well-being.
The May 24 virtual event, hosted by the Urban Institute and the Berkeley Opportunity Lab at the University of California, Berkeley, will explore lessons from the temporary expansion of the federal child tax credit in 2021 and how this support affected outcomes for children. Panelists include OpenSky Policy Institute Executive Director Dr. Rebecca Firestone.
Since 2021, 14 states have enacted or expanded refundable tax credits, building upon momentum from credits at the federal level that helped to cut the percentage of children living in poverty in the U.S. by half.
A proposed child tax credit in Nebraska, LB 294, has not advanced from the Revenue Committee.