Nebraska state lottery funds targeted for reallocation

With the Nebraska state government reportedly facing a $471 million budget shortfall according to reporting by the Nebraska Examiner, at least one state agency is reportedly looking to repurpose state lottery funds from the Environmental Trust to help finance its operations.

Trust supporters have described this development as one which is likely an unconstitutional raid of trust funds, which are state lottery proceeds granted to environmental projects. Meanwhile, a state official has described the transfer as a necessary one in order to continue soil and water conservation projects, arguing that it is in accordance with recently amended state laws which expand on the allowed uses of such funds.

$8 million transfer sought from Nebraska environmental trust

In a mid-budget funding request, the Nebraska Department of Water, Energy, and Environment (NDWEE) has reportedly indicated that it is seeking an $8 million transfer from the Environmental Trust. In its budget request, the NDWEE said that the $8 million in Trust funds would allow for the continuation of water resources programs in areas where water has been fully or overappropriated, with $6 million intended to be used for a soil and water conservation program, and $2 million to be used for salaries and administrative costs.

This proposal comes at a time when the state is reportedly at a point where a gap is closing in the state budget while supporters of the Trust grow concerned about raids on the grant funds.

A department spokesperson, Amanda Woita, said that the transfer to the Water Resources Cash Fund would be in compliance with the goal of the Trust funds, which she said is to conserve, enhance, and restore the state’s environment. She added that the Trust currently holds more than $70 million, and so would easily be able to afford an $8 million withdrawal. She commented that using such funds as a means of protecting the groundwater and surface water resources would be a “clear constitutional and common-sense use of the funds allocated to the Environment Trust”.

With that said, Sandy Scofield, a former state senator who is the head of the Friends of the Environmental Trust, has questioned the legality of the proposed transfer. Kristal Stoner, the head of Audubon Great Plains, has also stated that making use of one-time Trust funds as means of helping to solve a state budget problem would serve to erode the Trust and its purpose, which she said is to provide competitive grants to local and regional organisations seeking to enhance the state’s environment.

Stoner remarked that she is deeply concerned, and added that continued diversions of funds would mean the end of the Trust.

State lawmakers have previously rejected a proposal by Governor Jim Pillen which would have seen the use of Trust funds expanded to include “outdoor recreation” and “healthy infrastructure”. The separate Water Resources Cash Fund is primarily used to finance local projects to enhance stream flows and groundwater recharge in areas of concern about water resources.

Upon its creation, the water program was financed using state tax dollars, but since 2011 Trust funds have been transferred in some years to supplement the state water cash fund’s annual grants. In recent years, the Trust has reportedly built up an excess of funds by not awarding all the proceeds received from the Nebraska lottery, with $15 million having been granted out in 2024 of the $26 million available.

The full Nebraska Environmental Trust Board is set to meet on the 8th of January to consider approving the awards for this year.

In 2023, supporters of the Nebraska Environmental Trust had called on state lawmakers to oppose and reject a proposed transfer of $14 million out of the Trust, having described it as likely unconstitutional. At the time, Scofield had expressed similar sentiments to her recent comments, having said that the Trust was never intended to bolster the funding of state agencies. Scofield had further remarked that the Trust was not intended to benefit private interests, and was not intended to “pump up the budgets of state agencies”.

The proposed transfer of $8 million is set to be considered by the Legislature’s Appropriations Committee during the 2026 legislative session.

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