LINCOLN — Nebraska lawmakers advanced the second piece of the state’s budget-balancing plan Wednesday, though the only approved amendment made almost no change to the projected deficit.
Lawmakers moved Legislative Bill 1072 to the second of three rounds of floor debate with a 33-12 vote. The bill includes statutory changes needed to implement the budget adjustments already approved, including several cash fund transfers.
The Legislature began the session facing a projected $471 million deficit. Updated economic forecasts released in late February pushed that number to more than $646 million.
Members of the Appropriations Committee approved a series of spending cuts, changes, and cash transfers that lowered the expected deficit to about $125 million. However, officials say the actual shortfall is closer to $140 million.
Legislative Bill 1071, the other major budget measure, advanced Tuesday and is expected to return for its second round of debate next week. Under the Legislature’s schedule, lawmakers aim to finalize both bills and send them to Gov. Jim Pillen by March 25.
Several amendments were proposed that would have changed the deficit projection, but lawmakers adopted only one.
The approved amendment, introduced by State Sen. Tanya Storer of Whitman, restores $34,000 to the Niobrara Council Fund. Legislative Fiscal Analyst Keisha Patent said that amount represents roughly 0.06% of annual state spending.
Lawmakers rejected a proposal from State Sen. Jane Raybould of Lincoln to move nearly $90 million from the Perkins County Canal Project Fund into the state’s general fund and two additional cash funds. Raybould argued it didn’t make sense for lawmakers to sweep nearly every other cash fund while leaving the canal fund untouched.
“The biggest and most idle fund is the Perkins Canal,” Raybould said.
Fiscal analysts had previously suggested pulling money from the Perkins Canal fund during two separate meetings with the Appropriations Committee. The fund currently holds about $613 million, with roughly $595 million expected to remain unobligated for at least six years.
Republican members of the committee opposed using the money, and that stance carried into floor debate. State Sen. John Fredrickson of Omaha described the fund as “a land mine,” noting many lawmakers were unwilling to reconsider its use.
State Sen. Mike Jacobson of North Platte said he would oppose any attempt to remove “one penny” from the fund. He also warned that even discussing the idea could make Nebraska appear less committed to the project during its ongoing water rights lawsuit with Colorado.
“Colorado, if you’re listening, don’t get excited. We are still on track,” Storer said.
Raybould said she supports the canal project but disagreed with claims that using some of the money would undermine Nebraska’s position. She argued that Colorado may already view Nebraska as uncommitted because early stages of the project have yet to be completed.
Raybould also suggested lawmakers could pull money from the fund and use bonds to cover the difference, but Jacobson said he doubted the Legislature would support that option because it would create state debt.
Lawmakers also rejected proposals to restore $5 million to the Nebraska Cultural Preservation Endowment Fund and $3 million to the state’s Veterans Aid Fund.
While the approved amendments so far have had little effect on the deficit, the Appropriations Committee has been meeting during lunch breaks in recent days and approved additional spending cuts expected to reduce the deficit by about $70 million. The full Legislature is expected to vote on those changes next week.
The largest proposal includes a $50 million transfer from the state’s Tobacco Settlement Fund, which the committee approved Tuesday. Other recent adjustments include a $3.5 million transfer from insurance proceeds tied to lost housing at state prisons and a $2 million reduction in state mentorship grants.
Patent said several revenue-generating bills still awaiting debate could reduce the deficit by another $40 million if approved. Combined with the committee’s recommended cuts, that would shrink the $125 million deficit to less than $30 million.
Some lawmakers raised concerns about the continued reliance on cash fund transfers to balance the budget, a strategy frequently used in recent years. Fredrickson said the approach may seem efficient but could weaken the long-term stability of the programs those funds support.
“We can say we feel like it’s efficient,” Fredrickson said. “Efficiency is not just about dollar amount.”
Storer also suggested the possibility of across-the-board spending cuts, an idea mentioned last week by the governor’s policy research director after lawmakers rejected a proposal to raise the state’s cigarette tax by $1 per pack and increase taxes on vape products.
Storer noted that in 2018, the last time Nebraska budget bills struggled to clear a filibuster-ending vote, lawmakers agreed to cut nearly all state agencies by 2%. She said the state eventually recovered and revenues stabilized.
“It’s been done. The sky won’t fall. We’ll all be okay,” Storer said.
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