$1.5 billion
In a letter this week to state senators, Nebraska’s Auditor of Public Accounts, Mike Foley indicated that the state’s largest business incentive programs are on track to reduce General Fund revenues by $1.5 billion over the next four fiscal years.
Foley’s letter highlights the pending fiscal obligations of the state’s largest economic development programs, the Nebraska Advantage Act, which sunset in 2020, and its replacement, the ImagiNE Nebraska Act. Generally, these programs subsidize new employment and investment in the state by providing participating businesses with tax breaks, including income tax credits and sales tax refunds. The state’s obligation to provide these incentives can run well into the future, even after the original program has sunset. For example, even though the Nebraska Advantage Act no longer accepts applications, the state must continue to fulfill its agreements to businesses under the program for the next decade or longer.
Auditor Foley’s letter comes at a time when the Legislature is working to close a $289 million budget shortfall for the coming biennium budget, which consists of fiscal years 2026 and 2027. Additionally, the following biennium – fiscal years 2028 and 2029 – is currently projected to have a shortfall of more than $850 million. The two programs in Foley’s letter will reduce state revenue by more than $1.5 billion over the next four fiscal years, far more than the projected shortfalls over that same time period.
Other corporate tax incentives have been at the forefront of legislative debate recently. LB 650, introduced by Senator R. Brad Von Gillern would roll back several recently-enacted tax incentives, although the bill doesn’t address either of the programs highlighted in Auditor Foley’s letter. That bill passed the first round of floor debate on April 11.
36 million
Congress continues to work to find $880 billion in cuts to programs under the jurisdiction of the House Energy and Commerce Committee over the next 10 years, as outlined by a budget resolution passed in February. Committee Chair Brett Guthrie (R-KY) suggests that $200 billion of the total could come from instituting work requirements for Medicaid recipients, one of the favored policies of House Republicans.
The Center on Budget and Policy Priorities (CBPP) estimates that nearly 36 million Americans nationwide could lose coverage under Medicaid should work requirements be instituted. Nearly 2 in 3 adult Medicaid enrollees aged 19-64 already work, and most of the rest would potentially be exempted from the requirement based on having a disability, caring for family members, or attending school.
Data from Arkansas, which implemented work requirements in 2018 until a federal judge halted them the following year, showed that work requirements did not increase employment over time. Additionally, people in Arkansas ages 30–49 who had lost Medicaid in the prior year experienced adverse consequences: 50 percent reported serious problems paying off medical debt, 56 percent delayed care because of cost, and 64 percent delayed taking medications because of cost. These impacts were much more significant for Arkansans who lost coverage than for those who remained in Medicaid all year. Finally, the same research found that the work requirements policy was poorly understood, with more than 70% of state residents unsure whether the policy was currently in effect or not.
Should the federal government implement such requirements, or if they are instituted at the state level in Nebraska, they would be unlikely to increase employment among those participating in Medicaid and terminating care, all of which could increase the cost of health care for Nebraskan in the long term.
40 million
Since its inception 65 years ago, the Head Start program has prepared 40 million children in the United States for kindergarten. The program provides high-quality early childhood education to low income families and operates in every U.S. state and territory, including over 5,000 funded enrollment seats for children in Nebraska, where Head Start also provides jobs to more than 2,000 people. According to reporting by the Center for American Progress, 46% of Head Start funding goes to rural areas, often in places without any other child care options. In Nebraska, over $68 million is provided by the federal government for Head Start programs, the majority of which is allocated to the 3rd Congressional District which covers the western portion of the state.
The current administration is considering eliminating the program entirely and has already begun significant reductions in investments by laying off a significant portion of the federal Head Start administrative staff and shuttering multiple regional support offices.
