Pillen announces $14.5 million in vetoes from Nebraska budget, 83% of it from Supreme Court

Yahoo

22-05-2025

Nebraska Gov. Jim Pillen sits in his office in the Nebraska State Capitol. April 29, 2025. (Zach Wendling/Nebraska Examiner)
Editor's note: This story has been revised to reflect that Pillen's vetoed budget bills may not have been filed in time to be accepted.
LINCOLN — Gov. Jim Pillen announced late Wednesday that he intended to line-item veto $14.5 million in general fund appropriations from Nebraska's legislatively approved budget for the next two years, aiming 83% of his reductions at the Nebraska Supreme Court.
However, the Legislature said the vetoed bills were not properly filed by a midnight deadline Wednesday and that all vetoes were void 'pending further determination regarding the constitutionality of the present circumstances.'
In his veto letter returning Legislative Bill 261, the general spending budget bill, and LB 264, a bill allocating various state cash funds, Pillen thanked lawmakers for closing a major projected budget deficit for the next two years while making investments in education, developmental disability support and national security.
He sought to veto four items he said were 'necessary to honor our commitment to fiscal restraint,' and that the small number of objections reflects 'the depth of fiscal conservatism' in the budget.
'It is critical that we continue to treat nickels like manhole covers, and I urge you to sustain four additional reductions to improve our fiscal position,' Pillen wrote.
Even with the vetoes, the Legislature would still finish the budget with a positive balance of $1.1 million, because Pillen's approach would have reduced spending instead of using as much money from the 'rainy day' cash reserve fund. His approach reduced by about $14.5 million a transfer from the cash reserves. The lawmaker-approved state budget calls for transferring $147 million from cash reserves to help close a half-billion-dollar projected budget deficit.
The final balance includes $1.55 million in anticipated spending to raise judges' salaries by 1.5% in each of the next two years, via LB 513. Pillen's office has said those salaries are already competitive nationally. His staff has declined to say whether he would veto the raises if passed.
Three of Pillen's four line-item vetoes were to the state's general fund, Nebraska's main pocketbook that will cover a total of $11 billion in spending through June 2027:
$11.99 million reduction of an increase to the Nebraska Supreme Court.
$2 million cut from public health departments, zeroing out COVID-19 pandemic-era increases because the 'pandemic is over' and 'spending must be shrunk to pre-pandemic size.'
$511,972 from the State Fire Marshal for salary and health insurance premium increases because he argues the agency has 'sufficient funding' already.
The fourth veto sought to prevent an $18 million diversion of cash funds for Lake McConaughy recreational upgrades. Pillen said the project scope has changed over many years, and further discussion is needed about how local casino revenue could support road improvements.
For the Judicial Branch, Pillen pushed to have the Legislature limit spending growth to 0.625% in fiscal year 2025-26 (a $4.16 million smaller bump) and 1.25% growth in fiscal year 2026-27 (a $7.83 million smaller bump). Pillen said those percentage increases are the same as were afforded to the University of Nebraska.
Pillen said the Legislature approved bumps of 2.7% in the first fiscal year and 4.8% in the second year. He said court spending had grown by 36% over the past five years and blamed Supreme Court administrative leadership for not taking 'necessary steps' to reduce spending.
In his original budget proposal, Pillen sought to keep the Supreme Court flat at $232.82 million. He proposed cutting the university's budget by 2%, down to $676.99 million in general funds.
'Every branch of government must contribute to balancing our state budget,' Pillen said.
In contrast, Pillen said the budget included no growth for the Governor's Office budget, as Pillen requested, and less than 1% spending growth for the Legislature.
In a last-ditch effort last week, State Sen. Rick Holdcroft of Bellevue successfully preserved $3 million of a then-$5 million proposed cut to the Supreme Court, which court officials said could jeopardize certain problem-solving courts or other court services. Holdcroft said he was disappointed in the larger cut.
Problem-solving courts are intensive court programs bringing individuals and families together with one-on-one interactions with judges, prosecutors and defense attorneys, law enforcement, court officials and more, often to help Nebraskans receive intervention or avoid imprisonment.
This includes Adult Drug and DUI Courts, Veterans Treatment Courts, Reentry Courts, Juvenile Drug Courts, Young Adult Courts, Mental Health Courts and Family Treatment Courts.
Corey Steel, state court administrator for Nebraska, said in a memo to lawmakers Thursday, before the veto constitutionality was challenged, that the funding reduction would lead to the elimination of:
A DUI Problem-Solving Court in Lancaster County.
A Mental Health Problem-Solving Court in Sarpy County.
A Veterans Treatment Court in Sarpy County.
A Drug Court in Platte County.
All transition living reimbursements for adults on probation, post-release supervision or for those leaving problem-solving courts.
Non-statutory services for juveniles on probation and a reduction in the reimbursement of many vital placements.
Chief Justice Jeffrey Funke, whom Pillen elevated to the top role last fall, also pleaded with the Legislature to increase the court's budget. He listed a litany of items in his first State of the Judiciary address in January, in part because while the Legislature had increased the number of services the courts provide but had not always directed new funds specifically for those services.
Funke said existing dollars would soon run out, telling lawmakers that court officials 'have done what you have asked.'
'It is essential that the Judicial Branch receive adequate funding for the next biennium to sustain the progress we have made,' Funke said.
Those funds would be 'exhausted' at the end of the next biennium, Steel confirmed, and impact the sustainability of services such as judicial and guardian or conservator training.
Steel attributed spending increases largely to legislative action responding to more Nebraskans in the judicial system, particularly high-need, high-risk individuals who require supervision. He said employees in all branches of government also received funding for salary increases.
Steel said the Judicial Branch has also returned more than $30 million in unspent funds over the last six years, while, unlike other agencies, the court can't increase fees to offset any reductions.
'I urge the Legislature to override the governor's veto and again ensure these vital services, that save state and counties dollars by reducing incarceration, increasing community safety and rebuilding the lives of individuals and families,' Steel wrote.
State Sen. George Dungan of Lincoln, a defense attorney, said the 2025 session has seen a 'systematic wind back' of funding for essential services and those to make Nebraska better. He said cutting Supreme Court funding would hurt veterans, those struggling with mental health and other public safety initiatives.
'If you actually want to make Nebraska safer, you'd be funding those programs,' Dungan said.
State Sen. Dave Wordekemper of Fremont, a former longtime firefighter, said he was concerned that the veto of the Fire Marshal could possibly impact training for volunteer firefighters or in maintaining current services, which go toward keeping Nebraskans safe.
Pillen also used his veto letter to voice disappointment in the failure of LB 170 on Monday to provide additional property tax relief and mirror the success in 2024 of decreasing property taxes statewide, the first time in 26 years. It was an exception to two earlier years of nearly $300 million increases in property taxes that came largely because the state increased spending to take on the portion of property taxes that would have been paid to community colleges.
Multiple senators said the vetoes appeared targeted at specific lawmakers, such as freshman State Sen. Paul Strommen of Sidney, who represents Ogallala and Lake McConaughy. Strommen was one of seven Republicans who opposed the latest property tax proposal.
'The Legislature's failure this session means Nebraskans will not enjoy a repeat of this success,' Pillen said.
Strommen said he was surprised and a little confused at the veto of Lake McConaughy funding. He said he would continue fighting for his western Nebraska constituents and hopes to override the veto.
State Sen. Rob Clements of Elmwood, the Appropriations Committee chair, had no immediate comment on the vetoes.
Pillen's letter did not acknowledge that LB 170 largely mirrored the same doomed special session approach from last fall on property tax relief — a session called at Pillen's request.
The Pillen proposal in that session, too, tried to raise sales taxes and shift or use the revenue to offset property taxes. Pillen is 0-3 for such proposals. He pledged to hold property taxes flat this year and has said that without 'a shadow of a doubt,' he and allies would find additional property tax relief this year.
The budget the Legislature passed will direct $57 million for more property tax credits and about $11 million for homestead exemption increases. There is no similar takeover of a taxing authority like the community colleges.
Sales tax, tobacco tax push doom Nebraska's 'One Big Beautiful Bill' for property tax relief
Some opponents of Pillen's cuts to public health departments said they would impact new and essential services and that local communities might choose to fill the hole using property taxes. State Sen. Machaela Cavanaugh of Omaha said it was particularly damaging as measles continues to spread.
Pillen said that as 'stewards of the public's resources,' lawmakers must prioritize needs over wants and be 'conservative in good times as well as during fiscally challenging times.'
'Reducing spending is hard work, but Nebraskans expect us to exercise common sense and discretion in achieving a balanced, fair and operative budget,' Pillen wrote. 'Together we can reduce government growth, invest in our kids, provide tax relief to hardworking Nebraskans and remain true to our conservative values to make sure our state is the greatest state in the union to live, work and raise a family.'
The Appropriations Committee was set to meet Thursday afternoon for a first crack at which of the vetoes, if any, to try and override. Doing so would require at least 30 votes. However, upon the veto questions being raised, the meeting was promptly canceled.
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