Unicameral Update: Follow the Money

Below is a Unicameral Update from our lobbyist, Korby Gilbertson, regarding Gov. Pillen’s proposed 86-page Mid-Biennium Budget Adjustments plan. While there are numerous funds that would be swept under the proposal, of specific interest to the profession is the Governor’s plan to sweep $200,000 from the Nebraska Board of Public Accountancy both in FY2026 and in FY2027 – see page 79. Additional details on the Governor’s plan are below, with more tax proposals to come this week.

On a positive front, NESCPA Chairman Jodi Eckhout and State Board member Drew Blossom testified in favor of LB 718 on Jan. 20. LB 718 is the Society’s bill – introduced by Sen. Mike Jacobson – to add an additional pathway to CPA that includes a bachelor’s degree plus two years of experience. The bill also changes Nebraska’s experience requirements to one year with either a master’s degree or a bachelor’s degree plus 30 credit hours of education. Also testifying in support of the bill was the Platte Institute. Good news! On Jan. 23, the bill was placed on General File.

General File is the first time the full Legislature has the opportunity to debate and vote on bills. At this stage, senators consider amendments, which may be proposed by committees and by individual senators. Many people consider General File to be the most crucial stage of the legislative process because it is where most compromises are reached. It takes a majority vote of the Legislature (25 votes) to adopt amendments or move a bill from General File to the next stage of consideration.

FINAL REMINDER:  Our State Legislative Update with lobbyist Korby Gilbertson will be Tuesday, Jan. 27, at 8:00 a.m. Central. This is where we will discuss and determine positions on all bills of interest!

You can join us in person at the Society office or via Zoom as follows:

https://us06web.zoom.us/j/84753592473?pwd=dzsLiPfIACHCdCsxtLecRab1NBREuG.1

Meeting ID: 847 5359 2473  |  Passcode: 941064

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From NESCPA Lobbyist Korby Gilbertson:

No subject this session has caused more angst than Governor Pillen's proposed budget.   In a nutshell, the budget outlines a plan to make changes to General Fund, Cash Fund and Federal Fund expenditures in order to cover a $471 million deficit while making additional investments in education and property tax relief.  

It would take pages and hours to give you a complete picture, but I will attempt to cover the most severe cuts and look at the impact to current programs.  

At the center of the anxiety is the more than $331 million the governor proposes to transfer (sweep/cut) from existing programs to bolster the General Fund.  In the official "budget book" these transfers range in value from over $50 million to $12.  The funds being transferred include "excess fund balances" and "remaining fund balances" from more than 30 cash funds.  Then there are 59 other funds that will either be eliminated or swept of their "excess balances."  

Some of the largest non-cash fund transfers are as follows:

• Water Recreation Enhancement Fund: $50.7 million
• Nebraska Capital Construction Fund: $23.9 million
• Economic Recovery Contingency Fund: $18.1 million
• Nebraska Cultural Preservation Endowment Fund: $15 million  (terminates the Endowment)
• Homeless Shelter Assistance Trust Fund: $6.5 million
• Perkins County Canal Project Fund: $5.7 million
• Game & Parks Commission Capital Maintenance Fund: $4 million

Transfers that will eliminate funds/programs: 

• Nebraska Film Office Fund
• Superfund Cash Fund
• Oil & Gas Conservation Fund
• Food Distribution Program
• Nebraska Environmental Response Cash Fund
• Violence Prevention  Cash Fund
• Bioscience Innovation Cash Fund
• Foster Care Review Office Cash Fund
• Panhandle Improvement Projects Cash Fund
• Nebraska Arts Council Cash Fund
• Nursing Faculty Student Loan Cash Fund
• more than a dozen others

Governor Pillen has made no secret that he wants to increase funding for property tax relief, and his proposed budget would add an additional $170 million towards that goal.  The fund transfers mentioned above are part of the plan, but the budget also calls for across the board agency cuts and alternative funding for numerous existing programs.  The largest agency cuts are coming from the Department of Health and Human Services, where they have identified $152.4 million in "an unprecedented net savings."   The budget would also reduce General Fund appropriations approved during the 2025 session by over a billion dollars.  

The reductions in General Fund expenditures are primarily represented by cuts to agency budgets.  When reading  through the details of each agency and their corresponding budget, a common thread resulting in a reduced budget is that vacant positions have been closed, requests for increased health insurance costs have been denied, increased salaries have been denied,  director salaries are being covered by available cash funds or federal funds,  some agency programs are being shifted to cash funds, and one was "strongly encouraged to partner with the philanthropic community to supplement funding in areas where operational deficiencies may exist."

One major policy change represented in the budget involves the Health Care Cash Fund.  This fund was established by revenue from the tobacco settlement fund over 25 years ago.  Nebraska was one of only a few states that elected to protect the corpus of the fund and only sustainable expenditures to fund biomedical research, perinatal quality, pediatric cancer, cancer screening, tobacco prevention, respite services, minority health, and smoking cessation.  The budget proposes to eliminate current funding for these programs and suggests that federal funding designated for hospitals could replace the funding.  In place of those programs, the Health Care Cash Fund would now be used to fund  state  ward education, the Stay in the Game Cancer Screening Program, the Every Woman Matters Screening Program, the Dementia Advisory Council, the Dental Director, the Child Welfare deficit, and the 211 referral line.  This will obviously pit important programs against each other, and begs an answer to the age-old question of "if something is important to the state, shouldn't it be funded by General Funds?"

I will spare you from my other editorial comments as I am certain you have deduced that this is far from settled and will be thoroughly debated by the Appropriations Committee and Legislature.  The Appropriations Committee has started sending out hearing notices to agencies, and it appears as though most of their hearings will be held the first two weeks of February.  That will give them time to make final revisions to the final proposal that will be forwarded to the full Legislature on March 9.  

If you would like to read through the budget book yourself, here is a link:  Governor's Mid-Biennium Budget Adjustments 2026.pdf

Stay tuned for a review of pending tax proposals later this week.