Nebraska lawmakers advance first of two budget bills with no dent in deficit

State Sens. Teresa Ibach of Sumner, Tom Brandt of Plymouth, Merv Riepe of Ralston and Christy Armendariz of Omaha, from left, meet on the floor of the Nebraska Legislature. March 10, 2026. (Zach Wendling/Nebraska Examiner)

BY:ERIN BAMER

LINCOLN — After two days of debate, Nebraska lawmakers advanced the first of two bills to adjust the state budget, though no progress has yet been made officially to fill a $646 million projected deficit.

However, during Tuesday’s lunch break, the Appropriations Committee approved a series of spending cuts that would shrink the deficit by an estimated $60 million, if approved by the full Legislature. The latest recommendations won’t be voted on until the second round of budget debates next week.

The full Legislature voted 32-14 Tuesday to advance Legislative Bill 1071 to the second of three rounds of floor debate. The bill amends various appropriations approved last year when lawmakers set Nebraska’s biennial budget covering July 1, 2025 to June 30, 2027.

The second bill of the duo, LB 1072, began floor debate Tuesday afternoon, with a vote expected Wednesday. That bill deals with statutory changes needed to enact the approved budget adjustments.

Lawmakers began the session with a projected $471 million deficit, which ballooned to more than $646 million following new economic forecasts in late February. Appropriations members approved a collection of cuts, changes and cash transfers that brought the expected deficit down to about $125 million. In reality it’s closer to $140 million.

Under the Legislature’s schedule, lawmakers are expected to finalize both budget bills and send them to Gov. Jim Pillen’s desk by March 25.

State senators proposed several amendments during LB 1071’s debate, but only some would have impacted the deficit, and only one was adopted.

An amendment from State Sen. Bob Hallstrom of Syracuse approved $150,000 to expand grant programs for the Nebraska Tourism Commission. Legislative Fiscal Analyst Keisha Patent said because the appropriation would come out of the commission’s cash fund, the amendment should have no impact on the state’s general fund or deficit.

Lawmakers rejected four other amendments for LB 1071, including a proposal from State Sen. Tom Brandt of Plymouth to remove $3.65 million to help students using voter-repealed state funding attend private K-12 schools for one year.

Brandt’s amendment failed on Monday. During Tuesday’s debate, both Brandt and State Sen. Merv Riepe of Ralston said they would support the filibuster-ending cloture motion on LB 1071 this round, but they do not plan to support cloture in the second round of voting if the funding is not removed.

“This afternoon, I will support moving LB 1071 to select to support efforts of compromise and to keep the budget process going forward,” Riepe said. “Should the $3.5 million not be removed on select, I will not vote for cloture, nor will I vote to advance LB 1071.”

Multiple ideas have been floated as to how to fill the remaining gap, but it’s unclear if any has the votes to be adopted. State Sen. Margo Juarez of Omaha vouched for her LB 330, which would increase the sales taxes on alcohol to 15.5%, but noted she hasn’t seen much interest from lawmakers to advance the bill out of committee.

Last week, lawmakers rejected a bill, LB 1124, that would increase the state’s cigarette tax by $1 and increase taxes on vape products, which was expected to generate up to $50 million in revenue per year.

In place of that lost revenue, the Appropriations Committee approved pulling $50 million out of the state’s Tobacco Settlement Fund. This was the largest portion of the roughly $60 million in reductions the committee signed off on during Tuesday’s lunch meeting.

As of June 30, 2025, the settlement fund’s balance stood at about $647 million. State Sen. Rob Clements of Elmwood, chair of the Appropriations Committee, said if a new attempt to increase the cigarette tax is successful, the committee could vote to restore some or all of the transferred funds.

State Sen. Machaela Cavanaugh of Omaha, who did not support LB 1124’s advancement, pushed the committee to delay its vote on the settlement fund transfer, saying she believes the cigarette tax measure might be revived. Ultimately, the committee approved the transfer after hearing assurances from fiscal analysts that there would be enough time to restore the funds if the cigarette tax hike is approved.