$432 million
On Wednesday, Nebraska’s Tax Rate Review Committee projected a $432 million budget shortfall for the upcoming FY26-FY27 biennium, nearly $490 million below what was expected after the conclusion of the 2024 special session in August. The Legislature will set the budget for the upcoming biennium in 2025.
The Committee’s report cites three main reasons for this decline. First, the Nebraska Economic Forecasting Advisory Board (NEFAB) revised the state’s revenue forecast for the upcoming biennium to account for slower revenue growth during their October meeting, which projected $292 million less in revenue than previously anticipated. Agency budget requests for current-law appropriations in the upcoming biennium also outpaced prior growth estimates by nearly $127 million. Finally, deficit adjustments for the current fiscal year (FY24-25) exceeded the standard $5 million allocation for potential deficits by nearly $74 million.
While this is the most up-to-date version of Nebraska’s general fund financial status, these numbers will be refined as more data becomes available. NEFAB will update the state’s revenue forecast two more times before the end of the 2025 legislative session, and the Appropriations Committee has until early May (day 70 of the session) to finalize its mainline budget proposal.
$4.25 billion
Three large insurance companies won contracts with the State of Nebraska worth $4.25 billion over six years for administration of the state’s Medicaid program. A report by the Flatwater Free Press uncovered a trend in what was considered aggressive auditing by 28 of the state’s independent mental health providers. The audit process is designed to combat fraud, which may include billing for sessions that didn’t happen, billing longer sessions than were delivered, etc. However, many providers outlined clerical or technical errors being the impetus for their audits. The Nebraska Association of Social Workers surveyed providers, 42% of whom said they “downcode” their sessions to a shorter length of time than actually dedicated to the session to avoid being targeted for audits. Providers also point to the burden of being asked for thousands of pages of documentation as part of the audit process.
The process has resulted in many providers leaving the Medicaid system, leaving long-time patients to re-establish care elsewhere. This, when according to the Behavioral Health Education Center at the University of Nebraska, 88 of Nebraska’s 93 counties are considered to have a shortage of behavioral health professionals with 29 counties having no mental health providers at all.
119,000
Once home to an exotic dance club and the site of a fatal shooting, a blended stream of public and private investment has reclaimed 119,000 square feet of space in Denver’s East Colfax area, now known as The Rose on Colfax. The mixed-use structure, a project by Mercy Housing, which also owns properties in Nebraska, created 82 affordable housing units, ranging from 1-4 bedrooms, as well as a community gathering space available to residents. The building’s first floor features a 5,600-square-feet Mile High United Way Early Childhood Education Center, accompanied by a large outdoor play space, which will provide child care services in what has been identified as a child care desert. Spots in the child care program will be available for families who receive subsidies, and Head Start programming will be offered. Mercy Housing will also offer wraparound assistance to residents, including health navigation assistance, behavioral health services, financial literacy training, job training, resume assistance, after-school and youth programming, and food and nutrition education.
The Rose on Colfax combines multiple sources of funding from state, local, federal and philanthropic sources. They were awarded $11.5 million in Federal LIHTCs, which are available only in low-to-moderate income census tracts. and $4 million in state tax credits. The City of Denver and County of Denver, provided the land for just $10 to whichever agency won the competitive request for proposal. According to Mercy Housing, the land was valued at over $1.5 million in 2021 for the site only. If Mercy Housing had to purchase the land at market rate it would have required additional funding sources to make the project work. Eleven private funders and the City and County of Denver (Denver Office of Children’s Affairs) provided more than $1.8 million in funds for the build out of the child care center. Ongoing programming will be supported by philanthropic organizations throughout the area.
OpenSky Policy Institute’s annual appeal is currently underway. Your generous support allows us to keep you up to date on the latest research and analysis in taxation, budget, and policy throughout the year. As we prepare for the upcoming legislative session, your financial support would be greatly appreciated. You can donate here.