LINCOLN — When a new Nebraska Legislature convenes for its 2027 session, lawmakers will have the authority to accept or reject Gov. Jim Pillen’s plan to cut all state agencies’ budgets by a minimum of 5%.
Pillen announced the spending cuts in a July memo. Though the memo announced the reductions would begin immediately, there have been some exceptions.
State officials confirmed the cuts will not apply to Nebraska’s funding formula for K-12 public schools, while the funding formula for community colleges will be impacted later in 2027. State Budget Director Neil Sullivan said Nebraska Public Employees Retirement Systems won’t be immediately impacted as the agency receives its state appropriations once per year.
Since the memo came out, there have been questions about whether Pillen has the authority to implement the cuts. Several lawmakers say it’s blatantly unconstitutional, as it oversteps the Legislature’s power to approve the state’s two-year budget, colloquially referred to as “the power of the purse.” Others say it’s not a breach because Pillen isn’t truly amending the budget.
Lee Will, director of the state Department of Administrative Services, said that when the Legislature considers budget adjustments next year to fix a projected deficit that currently stands at $208 million, lawmakers can decide to apply whatever dollars have been saved as a result of the memo and use it to help fill the gap. Or, he said, lawmakers could reject the cuts and restore the funding to the affected agencies.
A straight 5% cut across state agencies would generate about $276 million per year, according to Pillen spokesperson Laura Strimple.
State Sen. Ashlei Spivey of Omaha, who sits on the Legislature’s Appropriations Committee, said she doesn’t want to use those dollars to fill the deficit because she is of the mindset that Pillen’s memo is unconstitutional. She said the framing of the memo was “misleading” to Nebraskans, and she doesn’t view the collected funds as savings.
“The cuts that would actually create a savings and that we need to be able to address, (Pillen is) not addressing,” Spivey said. “This is a self-imposed deficit, and so until he is willing to reconcile that and have serious conversations, then we in the Legislature need to continue to do our jobs.”
Spivey said she hopes agencies challenge Pillen’s memo through litigation. She added that the Legislature’s Executive Board, which manages the Legislative Council’s allotment in the state budget, will take up the matter of the Legislature’s own budget being reduced as part of the cuts.
Sen. Ben Hansen of Blair, the term-limited chair of the Executive Board, didn’t immediately know how much the Legislative Council would be cut, and said he hasn’t yet met with Sullivan to discuss it.
If he were returning to the Legislature in 2027, Hansen said he would encourage lawmakers to accept the cut funds. Balancing the budget is becoming more challenging with repeated sessions dealing with projected deficits, and he said lawmakers have a tough job ahead of them next year.
Hansen said he doesn’t view the governor’s spending memo as a separation of powers issue, because Pillen isn’t actually changing the budget, but instead is weighing how the appropriated funds should be spent.
Term-limited Sen. Machaela Cavanaugh of Omaha, who sits on the Appropriations Committee, agreed with Spivey that Pillen’s memo is unconstitutional and misleading. She said if the governor wanted to reduce state spending, he could call a special session or request code agencies make spending cuts, which he has done before.
Sen. Paul Strommen of Sidney, who sits on the Appropriations Committee, declined to comment on whether he thought Pillen’s memo was within the governor’s authority, but noted that the process is similar to the normal process the Legislature follows to form the state budget. The governor presents a budget proposal at the start of the session, and the Legislature makes adjustments to that proposal before finalizing it.
Strommen said he was undecided on whether the Legislature should use the money saved through the cuts to reduce the deficit, noting that it was too early to determine the need for it. He acknowledged that the state is in a tough financial position, and said people need to come with ideas to solve it.
Strommen said the next meeting of Nebraska’s Economic Forecasting Advisory Board in October is the “biggest piece of the puzzle” in determining how lawmakers should form the budget next session. The board’s projections will solidify the size of the projected deficit in the state’s current budget and the next biennial budget that lawmakers are tasked with finalizing in 2027.
“If those numbers come up, and we’re only $100 million (in the red), it changes the way that we’re going to approach cuts and deficit spending,” Strommen said.
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