Budget Changes

Governor Pillen shrinking state spending

Facing increasing state health care costs and the discontinuation of substantial federal pandemic aid, Gov. Jim Pillen announced he had to make significant adjustments to his proposed state budget. This included cutting funding for several programs he had previously endorsed just a year ago. In an unexpected move that caught the attention of several lawmakers, Pillen proposed reductions to nearly 50 programs that had been approved collectively by the governor and the Legislature over the past five years. 

The proposal contains a series of cost-cutting measures, totaling nearly $23 million, which includes funds originally designated to attract workers and businesses to the state and a reduction of $60,000 allocated for tax exemptions on livestock twine. Additionally, numerous boards and commissions that were established to facilitate citizen engagement in governmental processes are also facing elimination. Gov. Pillen emphasized the need for these reductions in his annual State of the State address on Wednesday, stating, “To shrink government we must eliminate its obsolete parts and clean out its closets. Especially at a time when we must tighten our belt…we must continually assess which parts of government are still of use to the people.”

Gov. Pillen has indicated that the anticipated budget shortfall is worsened by a decrease in federal funding for required Medicaid and health service expenses. He noted that the state’s share of these costs is projected to increase by approximately $200 million in the upcoming fiscal year and by around $352 million over the next two years. Pillen highlighted that the state can no longer rely on the significant pandemic relief funds that were available when he assumed office two years ago. Senator Danielle Conrad criticized the situation, attributing the projected shortfall to tax cuts supported by the governor and certain lawmakers, which she argues primarily benefit the wealthiest residents and corporations in Nebraska. She characterized this approach as “reckless financial decision-making and leadership.” 

In an effort to identify potential cost savings, Pillen stated that he is reviewing the record number of laws introduced in the past five years, including expansions of state incentives and legislation that combined multiple bills — as many as thirty at times — into single packages, alongside their associated funding. Pillen expressed his concern over the accumulation of bills, stating that this trend must come to an end. However, he admitted to reporters that he had indeed signed these bills into law and acknowledged that mistakes were made in some instances. "The most disappointing aspect of my tenure as governor has been dealing with these 'Christmas bills,'" he remarked.

by Robert Tengker