LINCOLN — After new economic forecasts grew Nebraska’s projected budget deficit by roughly $175 million, lawmakers turned to the state’s rainy day fund to help fill the gap.

The Legislature’s Appropriations Committee voted 8-0 Friday to recommend pulling $130 million from the state’s cash reserve to help plug the budget hole. Though Gov. Jim Pillen asked lawmakers to avoid using the reserve this session, Appropriations Chair State Sen. Rob Clements of Elmwood said the committee was left with little choice by the end of its budget deliberations.

“We’re going to have to take from the cash reserve,” Clements said. “There’s not enough other places to cut.”

Senators entered the 2026 legislative session with a goal of filling a projected $471 million deficit. Progress made by the Appropriations Committee reduced the shortfall by about $346 million, until new predictions Friday by Nebraska’s Economic Forecasting Advisory Board ballooned the projected deficit back up to $301 million.

Clements said he didn’t want to reduce the reserve to less than 10% of state expenditures by the end of the current two-year budget cycle. After facing a separate deficit of about the same size last session, lawmakers already have approved a $152 million transfer from the reserve, which is set to take effect at the end of the cycle.

To maintain the reserve at 10% of expenditures, lawmakers could pull another $130 million from the fund. This would leave the reserve’s ending balance at about $546 million at the end of fiscal year 2026-27, or about 10.1% of state expenditures, according to Legislative Fiscal Analyst Keisha Patent.

The committee approved a last-minute collection of other spending cuts Friday that Clements estimated would reduce the deficit by about $50 million altogether. Among the biggest contributors the committee approved was just over $15 million in estimated general fund savings discovered by State Sen. Machaela Cavanaugh of Omaha, who had researched retroactive eligibility for Medicaid.

One of the smallest cuts would reduce the cap on state senators’ annual travel reimbursements from $2,500 to $1,000, which Patent estimated would save approximately $86,000 per year.

Friday’s approved spending cuts, combined with the $130 million transfer from the reserve, would still leave a projected deficit of about $126 million.

Appropriations members are scheduled to meet with the Revenue Committee Tuesday to discuss potential revenue-generating legislation that could help make up the remaining difference.

Lawmakers have until March 25 to send a balanced budget proposal to Pillen’s desk.

Editor’s Note: This story has been updated to clarify the committee’s votes on general fund savings.

This story was published by Nebraska Examiner, an editorially independent newsroom providing a hard-hitting, daily flow of news. Read the original article: https://nebraskaexaminer.com/briefs/nebraska-lawmakers-propose-130-million-transfer-from-cash-reserve-to-help-close-budget-gap/