Aaron Sanderford
LINCOLN — Republican Gov. Jim Pillen plans to toss his party’s right flank some red meat next year before addressing the harder politics of closing Nebraska’s projected $432 million budget shortfall.
One reason could be the potential of Pillen facing Republican primary challengers in 2026. Those could include his top 2022 GOP primary opponent, Charles Herbster.
Pillen denied “political” motivations for picking any of his top legislative priorities for the 2025 legislative session, which he announced last week and detailed in an interview Friday. But all four policies are likely to be popular with the GOP base that typically decides races for Nebraska governor.
Echoing themes from his 2022 campaign and speeches around the state, he said his four goals for the session would benefit Nebraska’s “kids, taxes, agriculture and values.”
“Those four words, there’s a lot of opportunity to make a difference along,” Pillen said of the upcoming session, set to start on Jan. 8. “That’s what guides ’25.”
Governor’s priorities
He outlined those goals in a Dec. 1 statement and clarified them during the pre-session sit-down. Some highlights:
- He is trying again on legislation to restrict participation in middle and high school sports and use of school bathrooms and locker rooms to a student’s sex at birth. He signaled that he would like the legislation to cover college sports as well.
- He is pushing again for structural changes to how the state funds K-12 education to address property taxes, including revamping the state aid formula for K-12 schools. He says he plans to pay for any increased costs by broadening the number of services subject to the state sales tax.
- He seeks a law banning the sale of lab-grown meat in cattle-ranching Nebraska. He already established this approach with an executive order in August banning state purchases of lab-grown meat.
- And he aims to shift Nebraska to winner-take-all in awarding Electoral College votes in presidential elections, hunting for a 33rd vote to beat a certain filibuster.
What Pillen didn’t highlight
Missing from the priorities was closing the state’s projected $432 million budget gap, which was largely driven by Pillen’s previous tax-cut and tax-relief changes. Another contributing factor is more spending than the governor’s budget shows, an Examiner analysis indicates.
Pillen highlights his first two years of spending increases as being fiscally conservative. He cites budget documents listing the increases at 3.9% in fiscal year 2023 and 1.9% in fiscal year 2024.
But a review of two decades of state budgets shows Pillen’s team kept the spending figures lower than his predecessors’ budgets, partly by classifying some significant expenditures as budget transfers rather than direct spending.
This affects the numbers because money that is moved between funds, such as moving it from the general fund or the rainy day fund to the state’s new Education Future Fund, is classified as a transfer and not as spending, even if the money is being moved to spend on a specific purpose.
A key example is how Pillen’s administration lists a $1 billion investment in the Education Future Fund and follow-up investments in the fund as transfers. The fund is intended to cover special education costs and create a new baseline of K-12 public school aid, which Pillen has said would reduce some of the reliance on local property taxes.
Pillen’s budget numbers show that the general fund in fiscal year 2023 increased from $5.15 billion to $5.35 billion. If he had included the $1 billion in Education Future Fund spending, the general fund budget would have jumped to $6.35 billion.
If Pillen had classified the fund the same way other governors have done with similar investments, it would push the general fund annual spending increase to 23.5% in Pillen’s first year as governor. His combined two-year spending increase would be 22.5%, instead of the listed 5.9%.
By contrast, spending increased a combined 8.9% in the first two years of Republican Gov. Pete Ricketts’ administration. Previous Gov. Dave Heineman, also a Republican, increased spending a combined 9.6% in his first two years, an Examiner analysis found.
“The Education Future Fund is an investment in our kids,” Pillen said. “If somebody wants to call that spending, I don’t care. It doesn’t matter to me, but I believe in investing in our kids.”
Pillen also signed income tax rate cuts into law in 2023 that were projected to reduce revenues by $3.3 billion from 2024-2029. He and State Sen. Lou Ann Linehan of Omaha have called the cuts needed to compete better with neighboring states.
Those cuts phased in a reduction of the top income tax rate from 6.84% to 3.99% by 2027 and lowered corporate taxes. The governor’s critics say those changes risk the structural balance of future budgets. Some have questioned whether the state can afford the school spending changes Pillen wants.
Sports and spaces
On sports and spaces, the governor said he wants to see the next Legislature revisit the core of Legislative Bill 575, known as the Sports and Spaces Act, which fell to a filibuster in 2024.
Pillen said Nebraskans are right to want to “protect their kids” and act on their “values.” He repeated his stance that he has no ill will toward transgender kids or adults.
He said he thinks they should have the right to be who they want to be once they are old enough to understand the ramifications of their actions and mature enough to decide for themselves. But he wants specific legislation to protect women’s sports.
His issue, he said, is having a student with male characteristics playing against girls or “showering with your daughter and granddaughter.”
“That’s not going to happen if I can do anything about it,” he said.
He said he has less of a problem with women competing against men, because there is no “competitive advantage.” He wants a new law to require separate locker rooms, though.
“If there’s two young girls that are really good at wrestling and there’s not enough to have women’s wrestling, hey, it’s great to wrestle boys,” Pillen said. “That’s not a problem.”
The Nebraska School Activities Association, which governs middle and high school sports, has had a policy addressing locker rooms and sports eligibility of trans student-athletes since 2016.
In response to a question, Pillen said he didn’t have any concerns about a sports and spaces ban potentially impacting Nebraska’s longstanding relationship with the NCAA, which oversees college sports.
The NCAA, which has specific guidelines for each sport to allow trans athletes to participate, signs contracts that let Omaha host the College World Series and NCAA tournament games, including volleyball and basketball.
Pillen, who played defensive back for Nebraska football, said he does not think the organization would change where it holds one of its signature championships “over a state doing what’s right.”
“All due respect, the NCAA has failed college athletics miserably for the last 20 years,” Pillen said. “Whatever their opinion is, from my seat it really doesn’t hold any water.”
The author of LB 575, State Sen. Kathleen Kauth of Omaha, said she appreciates that Pillen remains committed to protecting “opportunities, safety and privacy” for women and girls.
“I am grateful he is willing to make this issue a priority,” she said.
Kauth has not yet shared a new version of her proposal or said how or whether her approach might change to secure more legislative votes. She has said she wants a proposal to include collegiate athletics.
Critics of the sports and spaces restrictions have said LB 575 and similar measures needlessly attack a tiny minority of children who are transgender and already at higher risk of self-harm.
Advocates for LGBTQ kids have said the governor and supporters of similar policies in this and other states risk creating a public panic that leads to increases in bullying or worse.
State Sen. Megan Hunt of Omaha, who helped filibuster the bill, said it was “embarrassing” but not surprising to see Pillen prioritize cultural issues instead of kitchen-table economics.
“I’m looking forward to working with my colleagues in the Legislature to address the budget deficit, child care, affordable housing, and other priorities for our state,” Hunt said.
School funding and property taxes
Pillen said he understands the challenge of pushing for changes to the state aid formula for K-12 education because legislative support often comes down to the impact on schools in senators’ legislative districts.
He said his focus remains reducing the property tax burden. He has been sharing tax rankings that he says hurt the state when he is trying to recruit new businesses and residents. He says lawmakers hear demands for change from their constituents.
He repeated many of the arguments he made last year when pushing for broader property tax reform: including that the state leans too heavily on property taxpayers to pay for schooling. He said he still wants to broaden the sales tax base to ease the burden of property taxes.
This year, he is focused on adapting sales taxes to the modern service economy. He said he expects pushback from people who don’t want to pay more for haircuts, massages and lawn care but said he would focus on taxing services people could do for themselves.
“Most of us agree we have a property tax crisis, so how do we come up with the fairest way?” Pillen asked. “If all of us are unhappy, then that’s going to be pretty good policy.”
He believes the state should fund the cost of operations — the costs of teachers, staff and classroom learning. He said local property taxpayers should fund the cost of school buildings, athletic facilities, and school grounds and maintenance.
He said buildings and maintenance would represent about $650 million of the $3.1 billion in property taxes spent each year on K-12 education in Nebraska.
“The school districts, the school boards, the communities, they decide what kind of buildings they want to have their kids in, and that stays on the property tax,” Pillen said. “If you want to build a Taj Mahal, good for you. Your people pay for it.”
He said he wants to fund education and work with school district leaders to spend less money on things that don’t help educate kids — the middle managers, administrators and “checkers of the checkers” who distract teachers from teaching.
Pillen says he is focused on finding government efficiencies. He says his team is working with school superintendents, the Legislature and the Nebraska Department of Education to reduce the number of costly state mandates on schools.
Legislation meant to curb unfunded mandates has stalled for years in the Legislature.
His goal is “decrease the administrative bloat“ and get more money back into classrooms. The next version of the state aid formula should build off the idea that it costs a certain amount to educate each child, he said.
He says he is hearing from lawmakers and people in education about the need to make sure that any formula accounts for fast-growing districts and that rearranging aid per student will make that easier.
Some school leaders have publicly supported the idea of shifting more school funding to the state. Others have questioned whether the state will be able to meet its K-12 commitments when the farm economy sours or when state receipts drop.
“I think running state government is just like life,” Pillen said. “It’s priorities. Education’s a top priority. We’re always going to find the money there.”
‘Fake meat’
Pillen wants Nebraska to join Florida and Alabama in banning the sale of meat alternatives, or if sales of some products that cannot be stopped to no longer be labeled as meat, which he said was misleading. He called it “bioreactor meat.”
He considers the proposal part of his years-long effort to fight against animal-rights activists and others who have tried to demonize production agriculture and animal agriculture, which is personal for him as an owner of a Columbus-based hog operation.
He said he hears from dairy producers dealing with labeling like almond milk, which he calls “almond nut juice.” He said companies shouldn’t be able to confuse potential consumers about what they’re buying.
He said he knows some Nebraskans might want to purchase lab-grown meat, but they “ain’t gonna buy it in Nebraska.” Lab meat defenders say they reduce greenhouse emissions, cut down on the use of antibiotics and reduce cruelty to animals.
“Cattle is king,” Pillen said. “We can’t stand back and reactive. We need to be proactive. So our policies are going to be aggressive … so we lead and create the dust, not eat the dust.”
Winner-take-all
Pillen also wants to make 2024 the last time Democrats can win a “blue dot” in the Omaha area’s 2nd Congressional District from a Republican candidate.
Nebraska Democratic Party Chair Jane Kleeb has said Republicans would rather change the rules than continue to compete.
Pillen says he wants to make Nebraska like 48 other states. Nebraska and Maine are the only states that award Electoral College votes to candidates for president by congressional district, in addition to giving two votes to the winner statewide.
Pillen pressed the Legislature to make the change in time for the 2024 general election but fell short of votes when State Sen. Mike McDonnell, a former Democrat-turned-Republican, said he wouldn’t back it.
He needed 33 votes to overcome a Democratic filibuster from senators in the Omaha area. One reason supporters like the current practice is seeing tens of millions of dollars being spent every four years on political ads and campaigns.
Many of those senators also like the boost to Democratic voter turnout in the 1st and 2nd Districts.
Nebraska Republicans have wanted to make the change for decades.
Republicans outnumber Democrats in the state more than 2-to-1 by registration, though nonpartisan and third-party registrants make up about a fourth of the state’s registered voters.
President-elect Donald Trump tried to persuade Nebraska senators to make the change earlier this year. Trump praised Pillen publicly for trying, but if Pillen can finish the job it could help him if he faces another run against Herbster, a multi-state businessman and top Trump donor whom Trump endorsed in 2022.
Pillen on Friday said there are 33 Republicans in the officially nonpartisan Legislature and noted that McDonnell leaves office in January.
“My belief is that it was a mistake 30 years ago (to stop using winner-take-all),” Pillen said. “If it was such a great policy … we’d have a lot of other states that have the same policy.”
He said he wants all states to play by the same rules when electing a president. He said he doesn’t believe the outside political money coming into Omaha is helpful.
He does not see the change as a means of voter suppression and said people shouldn’t need the extra motivation of a competitive presidential race to choose to vote.
“This is Nebraska,” he said. “This should be decided by Nebraskans, not lots of other people’s money. … Democracy is way more important. Our values are way more important.”