LINCOLN — Nebraska Gov. Jim Pillen on Thursday released his proposed budget, calling for spending cuts across state departments to address a projected $471 million shortfall. The plan emphasizes fiscal restraint while reallocating funds to priority areas.

The governor’s proposal would reduce overall spending by 0.4% in the 2025-26 fiscal year and 1.8% in 2026-27. About $192.6 million would be transferred from various cash funds into the state’s general fund. The budget office reviewed more than 900 cash funds, and 39 inactive funds would either be repealed or returned to the general fund.

The Department of Health and Human Services would see significant reductions, including roughly $22 million in the current year and over $130 million in the next fiscal cycle, largely through staffing adjustments and cash-fund reallocations. Some areas, such as the Department of Children and Family Services, would receive increased funding to meet growing demand, including support for more Medicaid-eligible residents.

Other elements of Pillen’s plan include eliminating retroactive Medicaid coverage, repurposing vacant positions across agencies, and expanding scholarship opportunities for K-12 students to attend private or parochial schools. The governor described the budget as a “practical and responsible approach” to stabilizing Nebraska’s finances while prioritizing taxpayers and essential services.

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