Kearney City manager outlines budget timeline, state changes and rising costs

Brenda Jensen, Kearney City manager, told the City Council on the city budget process, the new state rules that limit property-tax growth and a series of one-time and recurring cost pressures that will affect fiscal-year 2026 budgeting.

Jensen said the new state property-tax formula passed in 2024 under LB647 (and related session bills) replaces an earlier “lid on restricted funds” and allows a local government “slice” increase of 5.17 percent this year plus growth. She also warned that the state auditor has not yet released final forms showing how the state will implement the statute, so the city will not have definitive reporting guidance until roughly June.

The state’s Nebraska Advantage economic development program will cut into local option sales-tax revenue next year, Jensen said; the city has received notice it should expect a roughly $230,000 reduction in local-option sales-tax revenue next year.

Jensen said the city’s general fund remains under pressure from personnel costs, pensions and property-and-casualty insurance increases. She cited two recent state-mandated retirement increases — a police pension match increase that will raise the city’s cost for law-enforcement retirement contributions and a continued phase-in of firefighter pension increases — and she estimated those two changes, combined with Nebraska Advantage reductions, add roughly $390,000 to next year’s costs.

Why it matters: these changes affect how much the city must plan to collect and where it can direct limited general-fund dollars. Jensen emphasized…