Nebraska, like many states, is facing a significant fiscal crunch in the face of the recession and ongoing economic downturn. Its budget deficit is estimated at $679 million—about 10 percent of the two-year budget. The state received a temporary reprieve this year from Washington, D.C.—and taxpayers from across the nation—in the form of $250.6 million in federal stimulus funds, which were primarily used to help pay Medicaid and state public education costs. But that money will not be available next year. Legislative leaders have indicated that they intend to make up the difference through spending cuts, and not tax or fee increases.
The purpose of this paper is twofold: first, to look back over recent years to determine where the state’s money came from and where it went, and second, to offer a number of budget reform recommendations to help Nebraska balance the state budget while maintaining quality-of-life priorities for its citizens.