LINCOLN — For the third month in a row, Nebraska’s monthly tax receipts came in below economic projections, which could spell trouble for state lawmakers when they convene for the 2027 legislative session.

The state Department of Revenue’s report on May’s tax receipts showed a net loss of 7.8% compared to what Nebraska’s Economic Forecasting Advisory Board had predicted in late February. That difference equates to about $43 million less in revenue headed to the state’s coffers.

Lawmakers spent the 2026 session working to fill a fluctuating shortfall that hit its peak at roughly $646 million. They succeeded through a collection of spending cuts that many lawmakers agreed were painful, but left the state with a projected surplus of about $6 million.

However, just days before the session ended, the state’s March tax receipts put the budget back into the red. Tax receipts for March, April and May have all come in below forecasts, leaving an expected deficit of roughly $172 million.

The 2027 session is already slated to form the state’s next two-year budget for the upcoming biennium, which spans from July 1, 2027 to June 30, 2029. Nebraska’s latest financial status shows that biennium ending in a $631 million deficit.

If there is still a deficit projected in the current biennial budget when the 2027 session begins in January, Legislative Fiscal Analyst Keisha Patent said lawmakers would be tasked with filling that deficit on top of the $631 million deficit projected in the out years.

The true goalpost of what lawmakers would have to meet won’t be determined until the forecasting board’s next meeting in October. That meeting will set new projections for both the current and next biennium.

State Sen. Rob Clements of Elmwood, term-limited chair of the Legislature’s Appropriations Committee, said Nebraska’s budget is not yet at a “crisis point.” He said the $172 million can be absorbed through the state’s cash reserve, which currently stands at an ending balance of about $546 million.

Several lawmakers — including Clements earlier this year — have expressed wariness of drawing down Nebraska’s rainy day fund, saying it puts the state’s finances in a precarious position. But Clements argued Monday that lawmakers could theoretically pull the entire $546 million and still have about $330 million in minimum reserves.

The past three months of Nebraska’s tax receipts shared a pattern of individual and corporate income tax revenues falling below projections, while sales and use taxes came in above projections. Sales and use taxes were the only tax category to rise above projections in May by 7.1%, equating to a $14.7 million increase.

Individual income taxes were reported as 14.5% below forecasts, equating to a $46.4 million loss. Corporate income taxes came in 33% below forecasts, equating to a $3.2 million loss.

Clements said the biggest factor in the income tax revenue drop were higher-than-expected tax refunds, which were also said to impact March and April’s receipts. Though May is past the April 15 filing deadline, he said the state’s tax receipts reflect when refunds were issued by the Department of Revenue.

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/2026/06/15/nebraskas-projected-budget-deficit-exceeds-170-million-following-new-tax-receipts/