Nebraska Lawmakers Advance Plan to Close $262 Million Budget Gap Using Rainy Day Funds and Agency Cuts

After eight hours of intense debate, Nebraska lawmakers have advanced Legislative Bill 264, the second of two key budget bills aimed at addressing a projected $262 million shortfall in the state’s upcoming biennium. The measure passed its first round of debate Wednesday on a 34-6 vote and focuses on transferring funds from various cash accounts and the state’s rainy-day reserve for the 2025–2027 budget cycle. A late amendment reduced the deficit by approximately $219 million through dozens of cuts, including $12.5 million from the Department of Motor Vehicles Cash Fund and $8 million in construction fund interest. The bill also includes a $132 million transfer from the cash reserve. Critics like Sen. Machaela Cavanaugh of Omaha opposed the process and content of the amendment, calling it irresponsible and warning of possible downstream impacts, such as fee increases. Sen. Wendy DeBoer raised concerns about the DMV cut, arguing it could lead to backdoor tax hikes. While Appropriations Committee leaders defended the plan, some lawmakers cautioned that relying on cash fund sweeps isn’t a sustainable long-term strategy, with another deficit already projected for the next cycle.