# Nebraska Tax Refunds Widen Budget Gap for Second Straight Month  
**Published:** 2026-05-19T10:30:27.000Z  
**Source:** [Nebraska Examiner](https://nebraskaexaminer.com/2026/05/19/higher-tax-refunds-dip-nebraska-revenues-below-forecast-for-second-straight-month/)  
**AI-generated:** yes (claude-haiku-4-5-20251001)  
**Canonical:** https://lincolne.news/article/nebraska-tax-refunds-widen-budget-gap-for-second-straight-month

LINCOLN, Neb. — Nebraska's state budget slipped further into the red in April as higher-than-expected tax refunds offset income tax collections, widening the financial hole lawmakers must address during next year's legislative session.

Tax revenues came in 8.2 percent below forecasts for April — when most Nebraskans file income taxes — according to the state Department of Revenue's monthly report. The shortfall amounts to roughly $57 million in lost revenue, [reported the Nebraska Examiner](https://nebraskaexaminer.com/2026/05/19/higher-tax-refunds-dip-nebraska-revenues-below-forecast-for-second-straight-month/).

Combined with March's revenue shortfall of $72 million, the state's projected budget deficit has grown to approximately $129 million. The cumulative gap adds pressure on Gov. Jim Pillen and lawmakers to identify spending cuts before the 2027 legislative session begins, when they must balance both the current and next biennial budgets.

Individual income taxes plummeted more than 45 percent below forecasts in April, creating a $140 million deficit. However, the state paid out tax refunds that were nearly double what was expected — a $162 million variance — effectively transferring dollars from state coffers to taxpayers' pockets.

Pillen celebrated the larger-than-anticipated refunds, arguing they demonstrated the success of his tax relief agenda. "Nebraskans are keeping more of their pay instead of giving it to government," Pillen said in a statement accompanying the revenue report. "That's the objective we want to achieve for hard-working Nebraskans."

The governor attributed the lower revenue collections to [phased income tax rate reductions scheduled to reach 3.99 percent by 2027](https://nebraskaexaminer.com/2026/03/18/inside-nebraskas-budget-why-the-state-faces-structural-deficit-after-1b-surplus/), along with the federal "One Big Beautiful Bill" that automatically flowed into Nebraska's tax code. State Sen. Rob Clements of Elmwood estimated that federal legislation alone is reducing Nebraska's income tax collections by approximately $100 million annually.

One bright spot emerged in sales and use tax receipts, which exceeded forecasts by 11 percent — or $23 million. Pillen cited the strong sales tax performance as evidence of consumer spending strength and economic activity in the state.

Still, the overall revenue decline forced Clements to acknowledge that difficult decisions lie ahead. "It's not time to panic, but it's time to take a look at what's going on," said Clements, chair of the Legislature's Appropriations Committee. "Everything is going to be on the table" when lawmakers address the budget.

[This marks the third consecutive legislative session facing a projected deficit](https://nebraskaexaminer.com/2026/03/18/inside-nebraskas-budget-why-the-state-faces-structural-deficit-after-1b-surplus/). The current gap in the next two-year budget stands at $631 million, with the true scope of the problem likely to become clearer when the Economic Forecasting Advisory Board releases updated projections in October, Legislative Fiscal Analyst Keisha Patent said.

Pillen called for reduced government spending to address the shortfall. "We must run government like a business so that we are reducing waste, focusing on work that truly matters and reinvesting in the people of Nebraska," he said.

## Sources

- [Nebraska Examiner](https://nebraskaexaminer.com/2026/05/19/higher-tax-refunds-dip-nebraska-revenues-below-forecast-for-second-straight-month/)
- [Nebraska Examiner - Inside Nebraska's budget: Why the state faces structural deficit after $1B surplus](https://nebraskaexaminer.com/2026/03/18/inside-nebraskas-budget-why-the-state-faces-structural-deficit-after-1b-surplus/)
- [Nebraska Examiner - Nebraska budget back in $72M deficit after tax revenues come in below forecast](https://nebraskaexaminer.com/2026/04/15/nebraska-budget-back-in-72-million-deficit-after-tax-revenues-hit-below-forecast/)

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This article was generated by AI (claude-haiku-4-5-20251001) based on source material from Nebraska Examiner, enriched with 2 web searches. The original source is available at https://nebraskaexaminer.com/2026/05/19/higher-tax-refunds-dip-nebraska-revenues-below-forecast-for-second-straight-month/.