Nebraska’s projected budget deficit reaches $223 million after another weak month of tax receipts

Nebraska’s General Fund receipts came in below the state’s forecast for a fourth consecutive month, leaving fiscal 2025-26 net revenue $228.996 million below projections and reopening a current budget gap of about $223 million.

The shortfall arrives as Nebraska prepares for a more difficult budget cycle. A separate legislative projection puts the state’s financial status $631.9 million below the minimum reserve for the FY2027-28 and FY2028-29 biennium, which begins July 1, 2027. Agencies are due to submit their next biennial budget requests by September 15, and a new revenue forecast is expected in October.

June receipts missed by $51 million

The Nebraska Department of Revenue reported July 15 that June gross General Fund receipts totaled $809.4 million. That was $35.9 million, or 4.3%, below the $845.3 million forecast.

Refunds totaled $135.7 million, 12.5% above the monthly forecast of $120.6 million. After refunds were deducted, June net receipts totaled $673.7 million, $51.0 million, or 7.0%, below the $724.7 million forecast.

Refunds matter because they reduce the amount of gross collections available as net General Fund revenue. The governor’s office said the state paid out $307 million more in refunds during fiscal 2026 than had been anticipated.

Individual income tax led the June net-revenue miss

Net individual income-tax receipts were $260.8 million in June, $31.0 million below forecast. Net miscellaneous receipts were $62.2 million, $42.8 million below forecast.

Other categories performed better. Net sales-and-use-tax receipts exceeded the June forecast by $22.1 million, or 10.0%, while net corporate income-tax receipts were $647,700 above forecast.

For the full fiscal year, net individual income-tax receipts were $339.3 million below forecast, and net corporate income-tax receipts were $20.3 million below forecast. Net sales-and-use-tax receipts were $101.9 million above forecast, while net miscellaneous receipts were $28.7 million above forecast.

The June report compares collections with the monthly estimates developed from the Nebraska Economic Forecasting Advisory Board’s February 27 forecast. It does not assign one cause to the difference between actual and projected revenue.

Four consecutive misses totaled nearly $229 million

Net receipts fell below forecast by $78.016 million in March, $57.028 million in April, $42.951 million in May and $51.002 million in June. Together, those misses produced the fiscal-year cumulative shortfall of $228.996 million.

Total net receipts for fiscal 2025-26 were $6.741 billion, compared with the $6.970 billion forecast. The Nebraska Examiner separately reported that the latest figures put the state’s current projected budget deficit at about $223 million.

That current gap is distinct from the state’s longer-range budget outlook. Nebraska’s enacted 2026 budget report said the FY2025-26/FY2026-27 biennium was $6.25 million above the minimum reserve at the end of the legislative session. The report separately projected the FY2027-28/FY2028-29 biennium at $631.9 million below the minimum reserve.

Pillen orders spending restraint

Gov. Jim Pillen’s July 8 memo directed agencies, boards and commissions to exercise fiscal restraint in travel, hiring, membership dues, technology upgrades and equipment purchases. It also encouraged agencies to examine redundant processes and services, consolidate duties and review whether programs are meeting their objectives.

Agencies were asked to submit monthly reports beginning July 31 detailing savings from their initiatives. The State Budget Division is responsible for reviewing those reports and giving final approval to newly created positions and hiring.

The memo is an administrative restraint directive. It does not itself enact new appropriations, establish specific program cuts or settle the tax and spending choices that lawmakers will face in the budget process.

What happens next

The Nebraska Department of Administrative Services says agency requests for the 2027-2029 biennium are due on or before September 15, 2026, through the Nebraska Budget Request and Reporting System.

The next major revenue signal is expected from the Nebraska Economic Forecasting Advisory Board’s October meeting. That forecast will help shape the state’s financial outlook before the 2027 legislative session begins in January.

Until then, residents should not treat the governor’s restraint directive as a final list of service reductions. Decisions about taxes, appropriations, reserves and state services remain unresolved.

Sources

• Nebraska Department of Revenue — General Fund Receipts, June 2026
• Nebraska Legislature — 2026 Biennial Budget Report
• Office of Gov. Jim Pillen — July 8 spending-reduction memo announcement
• Nebraska Department of Administrative Services — Budget Request and Reporting System
• Nebraska Public Media — Nebraska’s tax receipts come in below projections for fourth month in a row

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