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The Nebraska State Capitol. (Cindy Gonzalez/Nebraska Examiner)
As a former state senator and chair of the Appropriations Committee, I am perplexed by the continuous discussion regarding our state’s “budget crisis.”
Let’s be clear. The situation in Nebraska right now is not a budget crisis. In my six years in the Legislature as chair of the Appropriations Committee, my colleagues and I navigated several historic budget crises. That’s not the situation we find ourselves in as a state today.
The 2020 legislative session was unlike any other. I realize that people say that about every session, but 2020 was a true anomaly. The world was navigating a global pandemic, the impacts of which were anticipated to be devastating.
Our session was interrupted to help stem the tide of hospitalizations and illness related to COVID-19. When we returned in July, we spent a lot of long, hot days debating a package designed to maximize economic incentive programs and provide long-awaited property tax relief, which we almost universally agreed was a priority.
The package, amended together in Legislative Bill 1107, was the result of those summer days in Lincoln. On August 13, 2020, we passed LB 1107 with a measured, strategic approach incorporating the input of stakeholders across the state, complete with guardrails to ensure smooth operation of critical state functions.
Fast forward to 2026. The pandemic is over. Nearly all of the individuals involved in the process of crafting LB 1107 have been term-limited and no longer serve in the Legislature. The Legislature has slowly chipped away at the package in the six years since, making the current landscape almost unrecognizable when compared to those original intentions. The guardrails are gone. The state has gone from feast to famine, blowing through a $1.9 billion surplus in 2023 to a $472 million deficit in 2026.
Let’s examine the facts. Our forecasted tax receipts are more than sufficient to meet the appropriations outlined in the biennial budget. Projected tax revenue sits at about $13.75 billion, and the Legislature appropriated just over $11 billion from the general fund. The math isn’t difficult.
However, we continuously end up in the red. So, let’s break that down. The reason for the continued deficits is hidden spending through “transfers out.” Imagine you follow the common-sense practice of transferring a portion of your monthly paycheck to your savings account. Your checking account balance decreases, correct? You have less money available to spend right now.
“Transfers out” work similarly. The state sends $3.5 billion from the general fund to other cash funds, decreasing the amount available for core state services. The transfers go to a variety of accounts, but by far the largest among them are dedicated to property tax relief. Only, it’s not a savings account. The fund gets depleted almost immediately when credits are issued to property taxpayers, so it’s like filling a bucket with a hole in it.
While Nebraska’s property tax situation is admittedly higher than other states, you can’t resolve the issue by continually throwing state tax dollars toward it, in the form of credits, without resolving the root of the problem.
Nebraskans deserve to know the reality of our state budget situation, and they deserve a forward-thinking strategy that creates the kind of balance necessary to be truly fiscally responsible. We are not in a budget crisis. We need to evaluate our priorities as a state and be intentional about where we invest our funds. We must use discretion and foresight, or we stand to lose the Good Life for good.
Former State Sen. John Stinner represented District 48 in the Nebraska Legislature from 2014-2022, including several terms as chair of the Appropriations Committee.
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