The top of the Nebraska Capitol Mar. 19, 2026. (Juan Salinas II/Nebraska Examiner)
Written by Jackie Ourada, Nebraska Public Media News and Noelle Annonen, Nebraska Public Media News
Records obtained Friday by Nebraska Public Media News show state agencies are using a number of strategies – ranging from cutting positions to potentially having employees sleep in cars rather than in hotel rooms – in response to Gov. Jim Pillen’s memo that said his State Budget Division would be withholding at least 5% of state agencies’ monthly allotments. The governor also implemented a hiring freeze on most state positions.
The governor’s order to state leaders in July followed a string of lower-than-expected tax receipts, which have continued to balloon the state’s financial hole. Nebraska is in a $208 million budget deficit and faces the next biennium with an already $840 million deficit on top of that. That’s despite lawmakers spending the past legislative session working to close budget deficits. A lack of funds prompted Pillen to release his memo in July.
In the submitted proposals, some departments offered up staffing reductions and fee increases to meet the conditions of the memo. Pillen’s office said all agency proposals are “hypothetical fiscal restraint considerations” and still require “substantial analysis” before being considered by the governor.
But not all agencies complied with the order. Many shared ideas for budget cuts but emphasized that staff have already been working to cut where they can for some time.
A few of the state’s largest agencies, such as the Department of Health and Human Services, the Nebraska State Patrol, the Department of Administrative Services and the Department of Motor Vehicles, did not submit budget plans, according to documents provided to Nebraska Public Media News by the Department of Administrative Services on Friday.
Departments detail their proposed changes
Significant changes could come to homestead exemptions, based on the preliminary budget cut proposals submitted by the Department of Revenue. Nebraska property owners eligible for a homestead exemption would pay at least 10% of their property taxes before credits are applied. That’s according to the department’s response that proposes narrowing homestead eligibility requirements. Previously, credits for the seniors and disabled people eligible for homestead exemptions were based on income, with the lowest earners receiving a 100% exemption.
The Department of Revenue also proposed closing its offices in North Platte and Norfolk.
In the report submitted about the Governor’s Emergency Fund, Military Department leaders wrote that the pot of money used to respond to natural disasters can’t withstand more reductions. The emergency fund continues to diminish as the state works on paying back money owed on former and current disasters, such as the 2019 floods. The report shows that only $1 million will be in the emergency fund for fiscal year 2027-28, assuming no new disasters take place.
The Department of Correctional Services said it will cut $10 million in general fund spending “while not impacting services and programs within the facility,” but will offset that spending by using $4 million from cash funds, such as the reentry fund and the correctional facilities fund. Corrections staff also reported that they will review all positions to see if the assigned duties can be absorbed by other staff members.
Agencies proposing staffing, operational cuts
The State Fire Marshal plans to cut positions, including a full-time deputy position and an accountant, while limiting training opportunities for staff.
The Nebraska Board of Barber Examiners would cut back on travel costs by doing fewer inspections, but when employees do travel, the agency proposed they sleep in their cars instead of getting hotel rooms. The State Electrical Division will reissue uniforms so long as they are clean and in good condition.
The Nebraska Commission for the Blind and Visually Impaired plans to discontinue a pilot Support Services Provider program for the DeafBlind community and focus instead on existing programs. Funding cuts will also affect paid public service announcements and community engagement efforts.
The Nebraska Public Employee Retirement Services is implementing software that will pre-answer any calls to reduce necessary call center resources. It will also reduce in-person seminars for members, even though educational outreach is required under statute.
The Tourism Commission will eliminate positions and reduce passport costs by lessening printing and increasing passport pickup events to lower postage costs.
Nebraska’s brand committee noted that it has the lowest number of employees in the committee’s history and is trying to keep both staff and travel costs low.
“Due to the many changes during the last Legislative session, we will be securitizing our field positions,” Brand committee staff wrote.
The Nebraska State College System plans to freeze 14 full-time positions, which would save more than $1 million, and leave 12 other positions vacant.
The Nebraska State Historical Society plans to cut around $240,000 by cutting positions. It also proposes increasing membership dues and History Nebraska Magazine Subscription rates, from $35 to $70, both of which have not been adjusted since 2018. The society will be raising fees, including Nebraska History Museum admission fees from $5 to $7 for adults and from $3 to $4 for kids. More fees will be raised at the Ford Conservation Center.
Agencies proposing fee increases
The Department of Insurance is raising licensing fees, anticipating collecting $2.2 million a year.
The Department of Labor plans to raise contractor registration fees to $40, up from $25. The department said the increase will raise an estimated $500,000. But the department will also ask the Legislature to increase that fee to $100 for a year, which could bring in as much as $2 million. Staff wrote that this is consistent with what surrounding states charge.
The Department of Water, Energy, and Environment said it will be able to raise $325,000 in increased fees to replace general funds from the state, although it did not clarify what fees it would increase.
The Department of Banking and Finance proposed raising fees on broker-dealers, investment advisors and others, expecting to bring in more than $3 million over the next few years.
The Department of Agriculture plans to rely on cash funds, which generally are funded by money raised from fees, to cover around $280,000 in staff salaries or state veterinarian costs.
State auditor takes aim at Pillen’s strategy
Mike Foley, auditor of public accounts, contributed the longest refusal in the cache of documents containing responses to Pillen’s memo. Over the course of five pages, Foley listed ways in which his office uncovered millions of dollars in government spending misuse. He pointed to his reports on discovering state employees using state vehicles for personal use, ineligible former state employees claiming benefits, and misuse of funds by non-profits.
Foley said some state agency responses to his office’s findings show they haven’t taken advantage of fixing systemic financial costs.
“Most disconcerting of all, perhaps, was the reaction of DHHS’ middle management to the WIC audit letter,” Foley wrote. “Rather than responding directly to the issues presented, DHHS managers enlisted Federal bureaucrats in an unsuccessful attempt to dissuade this office from publicizing some of the more startling details contained in the document.”
Foley made a case that his department works to save taxpayer dollars, and that a 5% budget cut would cost his office at least three auditors.
“Such a ‘penny-wise and pound-foolish’ approach to budgeting would unquestionably jeopardize countless taxpayer dollars by dramatically increasing their risk of undetected (much less unprevented) loss or misappropriation,” Foley wrote in his letter. He added that Pillen’s call for fiscal restraint is prudent and timely.
Secretary of State Bob Evnen’s office also declined to propose any reductions, arguing that the department already looks for opportunities to reduce spending and has carefully evaluated expenses.
This story was originally published by Nebraska Public Media News, a network of local reporters working with a National Public Radio station based in Lincoln.
