Nebraska’s Budget Problem Isn’t a Mystery. It’s a Spending Problem.

In a recent article, “Inside Nebraska’s budget: Why the state faces structural deficit after $1B surplus,” written by Erin Bamer for the Nebraska Examiner, I was struck by the fact that we are still unable to balance our budget. It’s a good article, and I highly recommend reading it. What follows is my perspective.

We went from nearly a $2 billion surplus to a projected deficit of $646 million. In this cycle alone, we will have dealt with a total shortfall of over a billion dollars. Where the deficit ultimately lands remains uncertain, as it depends on revenue flow, but the trend is clear.

So how did we get here?

Nebraska currently spends more than $1.2 billion annually from the General Fund on property tax credits and funding mechanisms such as the community college and K–12 future funds. These programs include phased increases year after year. If state senators were to eliminate these property tax credit programs entirely, it would effectively result in a 60–65% property tax increase — a move that would be seen as a state-imposed tax hike and, politically, untenable.

At the same time, income tax rate reductions have decreased state revenue. While those reductions were important to remain competitive and retain residents, they still impact the state’s fiscal position.

One notable bright spot is that sales and use tax revenues are increasing. However, that alone is not enough to offset the broader structural issues.

The article also suggests that term limits contribute to the problem by encouraging short-term thinking among lawmakers. I disagree with that premise. Legislators should be focused on what is right for Nebraska — not on political timelines. The responsibility of elected officials is to serve the people, not their own political future. That principle was foundational to how our system of government was designed.

The article concludes by outlining potential solutions.

Broadening the sales tax base is one option, and I believe it is worth considering.

However, imposing strict spending caps does not strike me as a practical solution. Such caps can limit local control and may not effectively address underlying spending behaviors.

A more realistic approach would be to either eliminate property tax credit programs or, at minimum, stop the automatic growth mechanisms built into those funds. Doing so would help stabilize the current trajectory.

We also need to address unfunded mandates coming from the Legislature. These place additional burdens on local governments and make it more difficult for them to manage their own budgets effectively.

Finally, Nebraska must do more to attract businesses — especially in rural areas. Economic growth is essential to expanding the tax base and strengthening long-term fiscal health.

Nebraska’s budget challenges are not accidental. They are the result of policy choices. Moving forward, we need disciplined leadership, honest evaluation of spending, and a long-term strategy that puts taxpayers first.