Nebraska Legislature advances budget package after votes restoring some programs, shifting cash funds

Nebraska lawmakers on the floor advanced a fiscal package that pairs spending reductions with a series of targeted restorations and cash‑fund transfers after a day of debate over the state’s revenue outlook and priorities.

Lawmakers framed the budget debate around recent revenue forecasts and a $350 million loss in federal FMAP payments that members said widened a projected shortfall. “What ensued afterwards was a series of revenue forecasts that were lowered significantly and the $350,000,000 in loss of FMAP federal dollars. And that's what put us in the hole that we're in,” said Senator Mike Jacobson on the floor, defending the appropriations committee’s approach.

The Legislature adopted a string of amendments tied to the broader budget bills. Those votes included restoring two years of funding for the Doherty Water for Food Global Institute at the University of Nebraska, moving $3 million to statewide domestic-violence services from the Medicaid managed-care excess profits fund, preserving some education service unit (ESU) funding reductions, and authorizing transfers from several cash accounts to shore up the general fund. Floor action also approved a $5 million increase in the cash‑reserve transfer to balance the biennial numbers.

Why it matters: Lawmakers said the package aims to hold general‑fund spending without large, across‑the‑board cuts while protecting specific programs deemed critical — but members sharply disagreed about which programs should be spared and whether tapping cash funds or reserves is prudent. The debate highlighted the tension between maintaining targeted investments and closing a structural gap many legislators said was driven in part by prior tax reductions and the FMAP change.

What the votes did - Doherty Water for Food Global Institute: The body adopted an amendment to restore $1 million ($500,000 per year) to the University of Nebraska for the Doherty Water for Food Global Institute. Senator Roy Dover, who brought the amendment, said the institute leverages a $50 million private gift and supports research and student work on irrigation, conservation and water quality. The amendment passed on the floor (adoption recorded 30 ayes, 11 nays). - Domestic‑violence services: Senators approved an amendment to use the Medicaid Managed Care Excess Profit Fund to make $3 million available to statewide domestic‑violence programs, after prior attempts to spend TANF dollars were blocked by federal reporting and confidentiality issues. Sponsor Senator Megan Boson said programs served 12,414 survivors last year and more than 1,800 needed emergency shelter; she warned federal Victim of Crime Act reductions had already cut program funding sharply. The amendment passed (40 ayes, 2 nays) and a trailing technical amendment to authorize expenditures was also adopted. - Rural and middle‑income workforce housing: The body later approved an amendment that restores $4 million back into two workforce housing accounts (rural and middle‑income) by transferring $8 million from the Nebraska Affordable Housing Trust Fund in the second fiscal year of the biennium. Proponents argued the funds are already committed to projects across the state and that delaying money would jeopardize approved awards; opponents warned the transfer removes long‑term capacity from the trust fund. - ESUs and school services: Lawmakers adopted a compromise amendment that reduces the size of proposed cuts to Education Service Units so smaller districts would not face the full state reduction in the second year; the amendment’s sponsor said it will limit property‑tax pressure in many small districts. - Litter, recycling and other cash‑fund transfers: The Legislature approved language that authorizes transfers from several cash funds, including the Nebraska Litter Reduction and Recycling Fund, to the general fund. That measure drew sustained opposition from senators who said more than $4.3 million in grants for 2025 had already been awarded to small communities and that sweeping the fund could leave obligations unpaid. The transfer-based amendment was adopted after debate (vote recorded 27 ayes, 12 nays). - Cash reserve: Legislative fiscal staff reported that cumulative amendments had moved the general‑fund position close to balance; the Appropriations Committee filed a fiscal amendment to increase the planned cash‑reserve transfer by $5 million so the package ended with a slightly positive projected balance. That technical adjustment passed on the floor.

Discussion and dissent: several lines of disagreement Supporters of the package, including Appropriations Chair Senator John Clements, urged colleagues to “look at the numbers,” noting that the committee’s plan draws down targeted cash funds and uses reserves to maintain critical services while avoiding deeper general‑fund cuts. “We can move to next year and in the event that the forecast goes the wrong way, we still have reserves to pay for that,” Senator Jacobson said.

Opponents raised two recurring objections: first, that some actions amount to ripping up agreements the Legislature made in prior sessions — especially transfers directed to inland‑port and economic‑recovery uses — and second, that using cash funds with legally or practically dedicated purposes (for example recycling grants or employee flex‑spending rollups) risks leaving already‑awarded projects without money. Senator Robert McKinney pressed for honoring previously negotiated three‑year interest allocations tied to the Perkins County Canal and inland‑port projects; his motion to require the transfers remain intact failed on the floor.

Other technical and legal details - Several senators noted that some cash‑funded grant awards have schedules and quarterly payments; the timing of incoming fees matters for liquidity and the ability to honor grants that were already announced. Senators on both sides urged colleagues to consult fiscal analysts and agency staff for the precise status of encumbrances and contract obligations before voting. - Domestic‑violence advocates told the chamber their programs are statutorily required under the state’s protection‑from‑domestic‑abuse framework and face both rising demand and federal grant cuts. Proponents framed the Medicaid‑funding route as a fix to prior attempts that failed because TANF funds could not be routed to the programs without creating federal compliance problems.

What’s next: The Legislature advanced the budget bills for engrossing and continues finalization on select file. Several senators said they will monitor project encumbrances and, if necessary, file follow‑up measures to restore funding where grants cannot be paid. Lawmakers also signaled they expect additional scheduling and votes in the coming days as the session approaches final reading.