$451 million

Two months from today, the Nebraska Legislature will reconvene for a planned 60-day session. Bills not passed or indefinitely postponed in the 2025 session will still be eligible for debate, and lawmakers will have the ability to introduce new legislation in the first 10 days of the session. The body is obligated to pass a balanced budget, a challenge that will be substantial after last Friday’s meeting of the Nebraska Economic Forecasting Advisory Board (NEFAB). The Board lowered their previous tax revenue projections from April by $367 million over the two years, setting up an estimated $451 million gap that lawmakers will need to fill before the session is complete. 

A portion of the forecast adjustment can be attributed to the One Big Beautiful Bill Act, which makes a number of individual and corporate income tax changes. Since Nebraska is a rolling conformity state, the state income tax code automatically adjusts with federal changes unless lawmakers take action to “decouple,” from any or all new provisions. The state Department of Revenue  projected these provisions will reduce state revenues by $216 million over the next two years. 

The next landmark in the budget process will be a meeting of the Tax Rate Review Committee in November, where they will finalize the projected shortfall amount and evaluate whether current sales and income tax rates are able to generate enough revenue to cover the state’s obligations. Additionally, NEFAB will meet once more in February, giving lawmakers the most updated data to use to adjust the state’s budget by their scheduled April adjournment. 

$33,900

The Urban Institute recently released the American Affordability Tracker, which tracks movement in everyday costs for American families as well as other economic health indicators. Nebraska was at or slightly above the national average in a number of positive markers, including an average credit score of 710 vs 696 nationwide and lower-than-average loan delinquency rates. However, in one key affordability marker, the average cost of child care, Nebraska not only ranked poorly, but has spiked significantly in recent years. The average annual price of child care for two young children is $33,900 in Nebraska, up 41.7% compared with $23,900 in 2023. The average is significantly higher than all neighboring states but Colorado, which implemented universal Pre-K in 2023. 

According to the First Five Years Fund, an early childhood education advocacy organization, 72% of Nebraska’s 154,000 children under the age of 5 have all available parents in the workforce. Nebraska families earning the median income and filing as married couples spend an average of 15% of their income on center-based child care, compared to 43% of a single parent’s average income spent on care. 

The estimated economic impact of Nebraska’s deficit in affordable childcare options is $781 million each year. Nationwide, the impact is $122 billion in lost productivity, wages, and earnings. This is more than double the losses reported by the same study in 2018. 

$95 million

Earlier this week, Colorado voters overwhelmingly voted in favor of a pair of proposals to provide free breakfast and lunch to all school students regardless of their family’s income level. Measure LL created an exception to a 1992 state Constitutional amendment known as the Taxpayer’s Bill of Rights, allowing the state to keep $12.4 million in excess revenue that would otherwise be returned to voters. Measure MM is projected to raise $95 million annually for school meals by limiting tax deductions for filers with higher incomes. The two measures, referred by the Colorado General Assembly, were the only items on the ballot in the state’s off-year election. 

Proposition MM makes permanent the limits in state income tax deductions passed by Colorado voters three years ago. The limits apply to filers earning over $300,000 annually, which would include about 194,000 Coloradans. They would pay an average of $486 more each year according to the state’s fiscal office. Prior to the vote, the General Assembly amended the proposal slightly to add more flexibility to direct funds for other food security programs. This will give the state an option to use extra funds to cover a nearly $170 million shift in administrative costs for the Supplemental Nutrition Assistance Program (SNAP) to the state from the federal government as a result of the cuts included in the One Big Beautiful Bill Act. 

Assuming a consistent error rate, Nebraska will need to fund 15% of SNAP benefit costs once changes are fully implemented. Using last year’s data, $332 million was paid to Nebraskans in SNAP benefits, so the state would need to find nearly $50 million to cover the gap. Universal school meals, a proposal outlined in last year’s LB 14 would cost the state approximately $90 million annually, according to the fiscal note. LB 14 currently sits with the legislature’s Education Committee.