Lawmakers advance second budget bill to final round of debate after first stalls

 State Sen. Megan Hunt of Omaha, center, talks with Omaha State Sens. Ashlei Spivey, John Cavanaugh, Wendy DeBoer and Machaela Cavanaugh durinb budget debate. March 19, 2026. (Zach Wendling/Nebraska Examiner)

BY:ERIN BAMER

LINCOLN — Hours after the first piece of Nebraska’s two-year budget adjustments hit a roadblock in the Legislature, the second piece of the puzzle advanced to a final round of floor debate.

Lawmakers advanced Legislative Bill 1072 in a 35-12 vote Thursday night. The bill deals with statutory changes needed to enact approved budget adjustments, including a collection of cash fund sweeps.

An amendment from State Sen. Rob Clements of Elmwood, chair of the Appropriations Committee, included multiple new transfers previously greenlit by the committee, including $50 million from the Nebraska Tobacco Settlement Trust Fund and $22 million from the state’s rainy day fund.

Altogether, Clements’ amendment would bring the Legislature roughly $83.2 million closer to filling a projected budget deficit that currently stands at around $125 million.

State Sen. Jane Raybould of Lincoln warned that some of the proposed transfers would set a dangerous precedent that would open the door for future Legislatures to continue pulling dollars from constitutionally protected funds.

“We are giving ourselves the blanket authority to go ahead and continue to do this year after year,” Raybould said.

Raybould mentioned sweeps from the Nebraska Environmental Trust and the state Board of Educational Lands and Funds as examples. She introduced multiple amendments Thursday — one that would strike the proposed $40 million transfer from BELF to the Education Future Fund and another to replace the transfer with $44 million from the Perkins County Canal Fund. Both failed.

Child care subsidies

Lawmakers debated an amendment from State Sen. Ben Hansen of Blair that would add a sunset to a provision maintaining income eligibility caps for child care subsidies at 185% of the federal poverty level. In 2028, the limit would revert to 130%, which Hansen said was the norm in Nebraska prior to the COVID-19 pandemic and an influx of federal funds.

Hansen said his intention with the amendment was to allow future lawmakers an opportunity to revisit the subsidies to see if the state could still afford it. According to figures from the Appropriations Committee, maintaining the eligibility at 185% would cost about $10.7 million this budget cycle.

However, State Sen. Wendy DeBoer of Bennington, who introduced the bill (LB 304) the provision was based on, said allowing just two years before the sunset date is not enough time. She noted that she introduced LB 304 in 2025, and it didn’t get out of committee until last week.

“It was two years just to get to this point,” DeBoer said.

Referencing an interim study that contributed to LB 304, DeBoer said if the state did not extend its current eligibility requirements, Nebraska would drop to the bottom five states in the U.S. for child care support.

“That’s not a race I want to win,” she said.

Although Hansen maintained that his suggestion was “good governance,” he eventually withdrew his amendment. While he said he’s confident the amendment had the votes to be added to the bill, he didn’t want the measure to jeopardize LB 1072’s chances to advance.

A few hours earlier, the first part of Nebraska’s budget adjustments, LB 1071, failed to a filibuster due to disagreements over a school choice provision in a proposed amendment.

Homeless aid

Some lawmakers objected to a $6.5 million transfer from the Homeless Shelter Assistance Trust Fund included in the second set of proposed budget adjustments. State Sen. Machaela Cavanaugh of Omaha brought an amendment to restore the funds, but she later withdrew it saying she was trying to work out a compromise before the end of floor debate.

Cavanaugh’s compromise amendment eventually passed 35-1. It delays the transfer to June 2027, when it was originally allowed to happen any time during fiscal year 2026-2027. Clements said this was to prevent providers from encountering a “pinch point” in their budgets.

Ashley Lewis, executive director of “The Connection” homeless shelter in North Platte, said the funding represents the only consistent annual source of state support for her shelter program that serves about 300 people a year, mostly from Lincoln County and surrounding western Nebraska communities where she said shelter services are limited or nonexistent.

Lewis said the funding accounts for about one-quarter of its annual budget and allows the shelter to leverage other funds that help them battle homelessness in the region. Judy Pederson, a Connection board member, said the stigma surrounding the homeless population is hard to overcome, and as a result, the North Platte organization relies heavily on the state grant as its “bread and butter.”

“Last year was a very difficult year and we dipped heavily into our reserves,” Pederson said. “Had we not had the funding from (the trust fund) we would have been at risk of closing.”

DeBoer questioned why lawmakers were seeking to use dollars from the trust fund to support the budget while also seeking to increase and repurpose the tax revenues going into the fund.

DeBoer was referring to LB 1067 from State Sen. Bob Hallstrom of Syracuse, which is waiting for its second round of floor debate. The bill would increase the documentary stamp tax, which fuels the trust fund, and allocate the increased profits to support rural and middle-income workforce housing.

DeBoer said this change would be deceptive to taxpayers who believe their dollars are used to aid Nebraska’s homeless population.

“Now, we’re not even being honest with our taxpayers,” DeBoer said.

Senior Reporter Cindy Gonzalez contributed to this report.