Nebraska’s projected $432 million budget deficit has shrunk following an optimistic economic forecast from the Nebraska Economic Forecasting Advisory Board. On Friday, the board projected an additional $165 million in tax revenue through June 2027, reducing the state’s expected shortfall to approximately $267 million. The forecast showed state tax revenues of $6.4 billion for the current fiscal year—$100 million higher than previously projected. For the upcoming budget cycle, revenues are expected to reach $7 billion in the first year and slightly exceed that amount in the second year, marking a $65 million increase from October’s estimates.
Governor Jim Pillen called the forecast “good news” and a sign of Nebraska’s strong economy but emphasized the need for a fiscally conservative budget. His current proposal includes a 0.5% reduction in state spending over the next two years and maintains existing tax relief measures. While State Treasurer Tom Briese pushed for additional property tax relief, Appropriations Chair Sen. Rob Clements noted that spending cuts will still be necessary to balance the budget.
Economic activity remains strong in urban areas, but board members raised concerns about rising housing costs and slowing growth in rural Nebraska. Board member John Kuehn compared the rural economy to a “rubber band” stretched thin by inflation and federal interest rates, warning that a single major event could strain many communities.
Uncertainty at the federal level, including potential tariffs and funding freezes under President Donald Trump, also left some board members cautious about their projections. A final forecasting board meeting is set for April 25, but with lawmakers required to advance a revised budget by April 29, the forecast’s impact on budget decisions may be limited. The legislature must pass the state budget by May 15.
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