Sen. Tanya Storer

Last week the Legislature began debate on the first major revenue proposal of the session: raising the tax on cigarettes by $1/pack. In November, I made a very public pledge that I would not support tax increases, along with three of my colleagues, so our vote should have been the least surprising issue of the day, yet tempers flared with frustration that we would not support this tax increase. Together, we committed to opposing tax increases on Nebraskans and to pursuing responsible solutions that focus on spending discipline rather than higher taxes. When we announced this pledge ahead of the 2026 session, the commitment was clear. Any legislative tax proposal should not increase the total tax burden on Nebraskans. If a tax rate is increased or the tax base expanded, it should be paired with a direct dollar for dollar reduction in another tax so that taxpayers are not asked to pay more overall.

The proposal before us would increase the cigarette tax as a way to address the state’s budget shortfall.

While some view this as a quick way to generate revenue, it raises serious concerns. This approach targets a single group of Nebraskans and relies heavily on revenue from lower to middle-income individuals.

In addition, data shows that the projected increase in revenue quickly drops off because it historically induces a black and gray market movement of tobacco products into high tax states from low tax states, referred to as cigarette smuggling.

Supporters of the proposal argued that the revenue would be directed toward Medicaid, which would help offset the amount the state’s General Fund currently contributes to the program. While Medicaid costs are a part of the state budget and deserve careful attention, raising a targeted tax to generate additional revenue still increases the overall tax burden. In addition, because statistically a higher percentage of smokers are lower income, we would be asking the very people that rely on Medicaid due to low income, to pay more taxes to fund it. This just doesn’t make sense. I believe it is important that we approach these challenges in a way that does not single out one group of Nebraskans to fill a budget gap and in addition make for good, sound, conservative tax policy.

It is also important to note that this proposal is not new. Senator Michaela Cavanaugh has introduced this very legislation for the last six years, and it has never been able to generate enough votes to get out of committee for full consideration by the Legislature.

Now, in the face of a significant budget shortfall, there is renewed interest in advancing the idea as a potential source of revenue. While the budget challenges facing the state are real, it is important that we approach them in a way that is fair and responsible for all Nebraskans. Simply put, we do not have a revenue problem, we have a spending problem.

My commitment to fiscal restraint remains central to my approach in the Legislature. Budget challenges require careful and responsible solutions, and I believe the first step should always be examining spending and ensuring taxpayer dollars are being used wisely.

Shifting the burden onto one group of Nebraskans, particularly those already facing financial pressure, is not a path I believe we should take. As debate continues, I remain committed to the pledge I made and to protecting Nebraska taxpayers while we work through the difficult budget decisions ahead.

Respectfully, Senator Tanya Storer