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Nebraska on the verge of bankruptcy because of tariffs, labor shortages? Truth behind viral claim
A rumor circulating online has claimed that Nebraska is on the verge of bankruptcy due to tariffs and labor shortages after immigration raids were carried out.
A rumor circulating online has claimed that as of August 2025, Nebraska is on the verge of bankruptcy because of tariffs and labor shortages after immigration raids were carried out. This claim, however, does not appear to be true, snopes.com has revealed.
The state constitution says that Nebraska must balance its budget every year; it cannot have a debt and cannot go bankrupt. Farmers in Nebraska, however, have been experiencing uncertainty due to new economic measures. This did put a strain on its grain sales to China.
What does the rumor claim?
A rumor that circulated this month claimed that Nebraska was $500 million short of its budget because of the economic damage tariffs and labor shortages inflicted on its farms. Immigration raids caused the labor shortages, per the rumor.
A video (archived) on Instagram claimed that the state witnessed $2 billion worth of contracts for exporting soybeans to China canceled after the tariffs were imposed. The video was shared on Facebook too.
The video was shared by TikTok user @joeclark207, who identified himself as an elected official from Georgia. Snopes.com confirmed that Joe Clark had actually been a council member for Fayetteville since 2020.
Is Nebraska seeking help to avoid bankruptcy?
The outlet said that no evidence was found about the state seeking help to avoid bankruptcy. Nebraska, in fact, is constitutionally mandated to balance its budget to ensure no debt is incurred.
Article IV-7 of the Nebraska State Constitution reads, “No appropriations shall be made in excess of the recommendation contained in such budget including any amendment the Governor may make thereto unless by three-fifths vote of the Legislature, and such excess so approved shall be subject to veto by the Governor.”
Article XIII-1 of the Constitution says, “The state may, to meet casual deficits, or failures in the revenue, contract debts never to exceed in the aggregate one hundred thousand dollars, and no greater indebtedness shall be incurred except for the purpose of repelling invasion, suppressing insurrection, or defending the state in war, and provision shall be made for the payment of the interest annually, as it shall accrue, by a tax levied for the purpose, or from other sources of revenue, which law providing for the payment of such interest by such tax shall be irrepealable until such debt is paid.”
To put it simply, the state must not spend more money than it takes in.
In April 2025, the state's economic forecasting board announced a $190 million shortfall in revenue for the 2025 fiscal year, adding that it was going to collect $90 million less than projected in 2026 and $100 million less in 2027. An April 26, 2025, report by The Nebraska Examiner said that the budget deficit for 2025 would be closed with state reserves.
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The Nebraska Legislature in May 2022 went on to pass several budget bills for 2025-27, closing the projected deficit. This left a surplus of $1.1 million.
Nebraska really did announce in July this year that it had ended its fiscal year with $86 million less in tax revenue than it had projected, in part due to tax cuts. Farmers in the state did face uncertainty after President Donald Trump decided to implement tariffs on China.
The US Bureau of Economic Analysis reported (archived) at the end of June that Nebraska’s gross domestic product had shrunk by 6.1% in the first quarter of 2025. "Agriculture, forestry, fishing, and hunting, which decreased in 39 states, was the leading contributor to the decreases in 11 states, including Nebraska, Iowa, Montana, and Kansas," the report read. At the time, KLKN reported that this happened because of higher costs and lower corn and soybean prices.
According to the report, John Hansen, president of the Nebraska Farmers Union, said that this was "the worst financial time for family farmers in decades." In March this year, WOWT reported that the Nebraska Farm Bureau said the state’s farmers sell $2.1 billion in grains to China every year, and were worried about a trade war between China and the United States.
