LINCOLN- Recent projections indicate that Nebraska lawmakers may have very little wiggle room for tax and spending changes this year despite starting the new session in what appears to be a comfortable fiscal position. The projections show state revenues exceeding budgeted spending by $379 million for the two-year budget period that ends in June of 2025, with an estimated cash reserve fund of $869.7 million by the end of that period.

However, state Sen. Robert Clements, chairman of the Legislature's Appropriations Committee, said lawmakers left those amounts in state coffers deliberately to make last year's major tax relief and school aid package sustainable in the long run. "It's not extra money that's available," he said. These packages, supported by Gov. Jim Pillen, are expected to cut or offset more than $6 billion worth of property and income taxes over the next six years, which would result in a state revenue decrease from $6.45 billion in the current fiscal year to $6.27 billion in the fiscal year ending in June of 2027.

Without cushioning in the current budget period, the state could win up in the red for the next two-year budget period. With a budget cushion, however, the future fiscal outlook gives lawmakers a bit of room to increase state spending or provide further tax relief since it had spent less than was budgeted in fiscal year 2022-23. The budget increases this year will likely come from lawmakers seeking to increase payment rates for hospitals, nursing homes, and other healthcare providers.

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