State Fiscal Briefs

January 2022

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Nebraska’s budget basics

According to the National Association of State Budget Officers (NASBO), Nebraska’s total expenditures in fiscal year (FY) 2020 were $12.9 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2020 were $2.3 trillion, ranging from $4.7 billion in Wyoming to $337.7 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Nebraska’s combined state and local direct general expenditures were $18.2 billion in FY 2019 (the most recent year census data were available), or $9,416 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.

Nebraska’s largest spending areas per capita were elementary and secondary education ($2,421) and public welfare ($1,502). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Nebraska’s combined state and local general revenues were $19.1 billion in FY 2019, or $9,876 per capita. National per capita general revenues were $10,563. Nebraska uses all major state and local taxes. Nebraska’s largest sources of per capita revenue were property taxes ($2,015) and federal transfers ($1,872).

Nebraska’s politics

Governor Pete Ricketts, a Republican, was elected in 2018 with 59 percent of the vote. The next gubernatorial election is in 2022.

Nebraska has a divided government. Nebraska is the only state with a unicameral legislature. While referred to as the “legislature,” the state Senate is the legislative body that remained after a 1937 reorganization created the unicameral structure. Republians control Nebraska’s Senate with a veto-proof majority (32 Republians to 17 Democrats). Members of the Senate serve four-year terms; roughly half the Senate seats are up for election in 2022, and the other half are up for election in 2024.

Nebraska’s budget institutions, rules, and constraints

Nebraska uses a biennial budget. The legislature is not required to pass a balanced budget, nor is the governor required to sign one, and deficits may be carried over into the following year. However, the state has budget rules that require lawmakers to balance revenues and expenditures. There are no further tax and expenditure limits in Nebraska, but there are limits on total authorized debt and debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Nebraska’s recent fiscal debates

  • Property taxes, specifically property tax relief, have dominated the past few legislative sessions in Nebraska. Governor Ricketts called property tax relief an “insuperable monster.” Most tax reform proposals would reduce property tax payments and replace the revenue with higher general sales tax revenues (by either hiking the tax rate or expanding the tax base). However, Governor Ricketts strongly opposes these plans and derided one as “the largest tax increase in Nebraska history.” Legislators from urban areas also typically oppose the reforms because the tax relief would mostly benefit farmers and ranchers while the tax increases would mostly fall on urban residents. The legislature approved $51 million in additional property tax relief in 2019, but many legislators “grumbled” that the state is still not doing enough to assist farmers, ranchers, and homeowners. As the state enters 2020, a legislative committee is again preparing reforms that would lower property taxes and increase sales taxes (in consultation with the governor’s office), while an advocacy group is attempting to get a $1.5 billion property tax cut (with no revenue offset) on Nebraska’s 2020 ballot.
  • Despite strong opposition from the governor and most Republican legislators, Nebraska voters approved expanding Medicaid under the Affordable Care Act in a 2018 ballot initiative. The state approved funds for Medicaid expansion in its FY 2020–21 budget, but advocates for the program are criticizing the administration’s slow rollout of the program.

Nebraska’s current budget

Nebraska enacted its FY 2020-2021 biennial budget in May 2019. Over the two-year period, the budget approved $9.4 billion in general-fund spending and $19.8 billion in total spending. Governor Ricketts released his FY 2020-2021 proposed budget adjustments in January 2020. The proposed adjustments were relatively small, including one-time funding for disaster-related costs, state capitol-building repairs, and patient safety at Lincoln Regional Center.

Nebraska enacted its FY 2020-2021 adjustments in August 2020. The enacted bill included additional funds for flood relief, rural workforce housing, and public health departments. Additionally, Governor Ricketts signed a bill that combined several tax changes (all reductions) with additional funds for the state’s academic hospitals. The centerpiece of the legislation was property tax relief delivered through a new, refundable income tax credit. Overall, the state estimates the bill will reduce general fund revenue by $95 million in FY 2021, by $135 million in FY 2022, and by increasingly larger amounts as the total amount of tax incentives and credits grows annually.

Governor Ricketts released his FY 2022-2023 biennial budget and gave his State of the State address in January 2021. Governor Ricketts’s “controlled” spending proposal is 1.5 percent above the spending in the 2020-2021 budget. Over the two-year period, his budget proposal includes $9.6 billion in general-fund spending. In his speech, the governor also advocated for additional property tax relief, including a larger homestead exemption and a new cap on local property tax revenue growth.

For more on Nebraska’s budget, see