Unicameral Update - My Favorite Time of Year!

mIt's FALL (sorry to all of you Halloween lovers), my favorite time of year! Crisp cool air, shorts and sweatshirts, and the last chance to take a breath before session starts.

Well folks, we better enjoy it while we can!  I have a sneaking suspicion that this session is going to be brutal.  Why? 

The 109th Legislature Second Session will be the last for at least 12 senators.  Senators Armendariz and Raybould have announced that they will not seek reelection.  Senators Arch, Brandt, Machaela Cavanaugh, Clements, DeBoer, Dorn, Hansen, Hunt, Moser, and Murman are all term limited.  Senator John Cavanaugh is running for Congress and should he win, his seat would be open for appointment.  This means we have a good number of people looking to leave a legacy and those aren’t always easy things to get done. 

On January 7th, we will hit the ground running for what is always a fast-track short session schedule.  If things go as Speaker Arch has planned, we could be done with session as early as April 10th.  This means that we all need to be prepared before session starts and keep on top of things as the session progresses.  Does this mean that everything will be on fast-forward?  Not necessarily.  There are already rumors of some committee assignment shenanigans and a potential impeachment process for a non-legislative elected official. But the big issues for the session will be the budget and revenue (shocker!).  Here’s a link to the calendar so you can print and tape it to your wall like I do! https://nebraskalegislature.gov/pdf/session/2026calendar.pdf 

The Nebraska Economic Forecasting Board met this morning, and it wasn’t pretty.  In a nutshell, the Appropriations Committee will be faced with a $367,062,000 shortfall coming into session.  Governor Pillen already announced that he was looking for $500 million in budget cuts.  Hopefully, he doesn’t want to add the two figures.  If you are interested in the details, they are as follows:

• For the 2025/2026 Fiscal Year: Sales Taxes +60.062m; Individual Income Taxes -54.963m; Corporate Income Taxes -117.988m; Misc. Taxes -6.95m for a total loss of $119.839 million
• For the 2026/2027 Fiscal Year: Sales Taxes -123.218m; Individual Income Taxes -51.753m; Corporate Income Taxes -50.251m; Misc. Taxes -21.901m for a total loss of $247.123 million

As I watched the Forecasting Board discuss the forecast there was a mixture of optimism and skepticism.  Most seemed to agree that much of what was happening to the economy in Nebraska was due to outside (read federal) impact. However, when compared to external modeling they receive, their forecast was more positive than I expected it to be.  They will meet again on February 27, 2026, to give the Legislature a final forecast before the budget is finalized. 

Governor Pillen issued a statement shortly after the Forecasting Board adjourned.  It is as follows:  

Gov. Pillen Highlights Spending Cuts, Forecasting Board Update

LINCOLN, NE – Governor Jim Pillen released the following statement at the conclusion of today’s Nebraska Economic Forecasting Advisory Board meeting, which reduced the revenue forecast by $120 million in FY 25-26 and $247 million in FY 26-27.

“Since day one, my administration has been focused on running government like a business and bringing fiscally conservative values to Nebraska state government. The forecasting board’s projections underpin the critical work of cutting government spending and identifying efficiencies while we improve services. Earlier this year, I announced our effort to deliver $500 million a year in cuts that will directly benefit hardworking Nebraskans. It’s a big number, but it's necessary as we work to fix the broken property tax system, end special interest carve outs and exemptions, and balance our budget.” 

Governor Pillen’s full executive budget recommendation will be released mid-January along with his annual State of the State address.

Some believe that sessions are easier when there isn’t any money.  I don’t think that is true anymore.  It isn’t that we don’t have money, it is that senators are going to be forced to choose winners and losers. While I admire the Governor’s goal of running government more like a business, it is difficult because government serves the people and defunding needs doesn’t make them go away.   I do not envy senators or the Governor while they make these difficult decisions. 

I also expect that we will see another attempt at a sweeping sales tax proposal.  Right now, the votes aren’t there to pass that type of tax shift. But as we all know, the Devil is in the details and I’m sure discussions have already begun to find a package that can pass. 

Have a great Halloween if you celebrate!  Go Big Red! And stay tuned for more as session approaches!

Korby M. Gilbertson
Radcliffe Gilbertson & Brady