Unicameral Update - Is three a lucky number?
March 30, 2026
By Korby M. Gilbertson, Radcliffe Gilbertson & Brady
The Rules of the Legislature state that the budget must be passed by the 50th day. Well, today is the 52nd day, and we still have one more round of debate before the budget will hopefully make its way to the corner office.
It took senators three tries to break a filibuster on the main budget bill. Some might say the third time was a charm; others, three strikes and you are out! Either way, it turned out to be negotiated mutual destruction. At the center of the controversy were two funding items, both of which were designed to assist low-income children and families. Both issues also illustrate why policy should not be established via appropriations bills.
The first controversial issue was $7 million in funding for private school scholarships that Governor Pillen placed in his proposed budget. This issue has made its way to the ballot twice and been resoundingly rejected by voters both times. Thus, Governor Pillen placed the issue directly in the budget to avoid having to pass both statutory and appropriation proposals. The Appropriations Committee made the decision to cut the appropriation to $3.5 million. Later, after additional cuts were necessary, Chairman Clements made the decision to eliminate all proposed funding. As you can imagine, there were some very unhappy people.
What did those unhappy people do? They went after the funding for childcare assistance for low-income families. Never have you heard more accusations about the "other side" not caring about children. In the end, the funding for both was cut from the budget. However, childcare subsidies may have another chance because that issue did have an underlying statutory proposal: LB 304, which is near the bottom of tomorrow's agenda.
It is difficult to find any positive things to say about the budget this year. The Appropriations Committee was in an impossible position of having to cut beyond the point of pain for some programs. They also made some cuts and transfers that will test the trust of Nebraska fee and taxpayers.
There are five examples of cuts/transfers that I believe illustrate a philosophical shift in the budget-making process. First, a $40 million sweep from the Permanent School Fund. This is the fund where all statutory fines and penalties are placed and constitutionally required to be used specifically for public school purposes. Yes, I said constitutionally. There is even an Attorney General opinion stating that the funds cannot be swept for other purposes. The response from the Administration and Appropriations Committee? Sue the state so we will know for sure whether we can sweep them. I'm not kidding.
Second, if you have ever sold real property, you have paid a Documentary Stamp Tax. The current tax is $2.32 per $1000. The funds go to several places, including counties and a variety of housing funds including the Affordable Housing Trust Fund, homeless shelter funding, and domestic violence survivor housing. In recent years, funds have been swept from the Affordable Housing Trust Fund and used for other purposes. This has led to opposition to any attempt to increase the tax. This year, the Appropriations Committee decided to sweep the homeless shelter funding. There is also a bill that will increase the tax to $3.32 and because no legislature can bind a future legislature, there is no guarantee that those new tax revenues will be protected.
Third, the Environmental Trust. It was established constitutionally to receive funds from the lottery and to be distributed by grant for environmental projects. This year, funds are being swept for purposes that are considered environmental -- but not by grant, and not by the Environmental Trust Board.
Fourth, the Nebraska Cultural Endowment was created in 1998 as a public/private partnership intended to support arts and humanities across Nebraska. The Endowment has shown an incredible return on investment because donors view it as proof of Nebraska's dedication. After foregoing annual appropriations more than once during lean budget years, Governor Pillen's original budget proposed to sweep the entire $15 million corpus of the fund. Those funds are there because only the earnings are used to match private donations. Eliminating the Endowment would have been devastating not only to future fundraising, but also to current pledges and ongoing projects. The Appropriations Committee reduced the swept amount to $5 million, but the impact to the public's perception of this partnership is still unknown.
Last but not least is the Heath Care Cash Fund. In 2001, the Legislature appropriated $50 million from the Medicaid Intergovernmental Trust Fund and the Nebraska Tobacco Settlement Trust Fund to the Nebraska Healthcare Cash Fund. The legislation further instructed that the state investment officer was to ensure that the fund could be sustained into perpetuity. The fund has historically been used for fewer than a dozen purposes, all related to healthcare. One of the primary purposes is biomedical research, which has had a more than tenfold return on investment. This year, all of the research dollars were at risk of being swept, and although the Appropriations Committee protected the majority of that funding, millions of dollars from the fund have been repurposed. The risk? Nebraska is one of a very few states that didn't burn through tobacco settlement funds and has fiercely protected them for more than 25 years. Using the funds for an increasing number of purposes puts the corpus and the future of numerous programs at risk.
If all of that isn't depressing enough, just remember that next year isn't expected to be any better.
The good news? Today is day 52, and we will still hopefully adjourn sine die on day 59 (April 10).
Have a great week!