Monday, April 28, will mark Day 69 of the 90-day session. However, last Friday, the Nebraska Forecasting Board released its last report before the Legislature discusses the budget. As expected, the Board once again lowered the state’s revenue forecast, estimating a decline by another $190 million over the next biennium. This further widens the state’s forecasted budget deficit to $341 million.

Some of the bills discussed and advanced last week will start to close that gap, if passed. LB650 generates over $55 million by reducing or eliminating recently passed tax credit programs and tax exemptions. Another $80 million would come from reducing the state, teacher, and school contributions to the teacher retirement fund; the plan is 99.9% funded, well above the 80% minimum. This will not only save the state money, but will also result in more take-home pay for public school teachers.

In addition, the Appropriations Committee’s proposed budget will take a total of $145 million in principal from various cash funds and $19 million of investment earnings from other cash funds. The committee’s preliminary budget also calls for millions of dollars in cuts from state agencies.

I can hear the shouts from the progressives in the body that the budget shortfall is due to recent tax cuts, which include lowering the state’s income tax rate and eliminating the state tax on Social Security benefits. There will be further calls to claw back the funding to build the Perkins County Canal and the funding to build the new state prison. However, there will be no mention of the $1 billion used to fund the Education Future Fund to provide more funds to public education funding and, of course, the millions of dollars to further develop North Omaha.

Even with the reduced revenue projection from Friday’s forecast, the state is projected to bring in $6.95 billion in net revenue next year. This is the highest amount of revenue since the fiscal year 2023-24, when state revenues totaled $7.15 billion. This was the year following the federal PPP loans and other federal transfer payments dealing with the pandemic. As a result, state income tax revenues soared.

It is always important to remember that spending plays a large role in the budget shortfall, and the reduction in federal Medicaid payments of $90.3 million impacts this year’s budget.

I remain confident that further cuts in spending, coupled with selected sales tax exemption repeals or increases, will allow us to find the funds necessary to balance the budget. The sales taxes that are proposed to go on the tax rolls include items that will not impact the poor and will not be taxes on business (and ag) inputs.

I am committed to keeping our tax relief measures in place and will defend them on the floor. We have a spending problem and cannot give up the progress we have made in reducing our state’s tax burden. The sales taxes we are proposing would be on items that are not necessities and are wants, not needs.

I look forward to continuing to hear from you about issues that are important to you. It is a privilege to serve as your State Senator, and I will continue to give my full effort to make a positive difference for the District and the State. You can reach me at mjacobson@leg.ne.gov or 402-471-2729.