Claim:
In August 2025, Nebraska was on the verge of bankruptcy because of tariffs and labor shortages following immigration raids.
Rating:
Context:
Nebraska must balance its budget every year, as required by the state constitution. In other words, it cannot have a debt, which means it cannot go bankrupt. However, Nebraska farmers have experienced uncertainty because of new economic measures, which have put a strain on its grain sales to China.
In August 2025, a rumor circulated that the state of Nebraska was on the verge of bankruptcy — $500 million short of its budget because of the economic damage tariffs and labor shortages inflicted on the state's farms. Labor shortages were due to immigration raids, the rumor claimed.
For example, a video (archived) on Instagram said Nebraska farmers had seen $2 billion worth of contracts for exporting soybeans to China canceled following the imposition of tariffs:
https://www.instagram.com/p/DNXvg2dtadH/
As of this writing, the video had more than 840,000 views and 49,000 likes. The same video appeared on Facebook. Further, Snopes readers emailed to inquire about the veracity of the claim.
The video came from TikTok user @joeclark207, who identified himself as an elected official from Georgia. We were able to verify that Clark had indeed been a council member for Fayetteville since 2020. We emailed Clark to ask how he concluded that Nebraska was in financial trouble and will updated this story should he reply.
However, we could find no evidence that Nebraska was seeking help to avoid bankruptcy. In fact, the state is constitutionally mandated to balance its budget so as not to incur debt.
Constitutional requirements
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.
Further, Article XIII-1 of the Constitution reads:
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.
In other words, Nebraska must not spend more money than it takes in.
However, it is true that in April 2025, the state's economic forecasting board announced a $190 million shortfall in revenue for the 2025 fiscal year. It also said it would collect $90 million less than projected in 2026 and $100 million less in 2027. The budget deficit for 2025 would be closed with state reserves, according to an April 26, 2025, report bytThe Nebraska Examiner.
Following this forecast, in May 2025 the Nebraska Legislature passed a series of budget bills for 2025-27 that closed the projected deficit, leaving a surplus of $1.1 million.
Economic uncertainty in Nebraska
It was true that Nebraska announced in July 2025 that it had ended its fiscal year with $86 million less in tax revenue than it had projected. This was due in part to tax cuts.
It also was true that farmers in Nebraska were facing uncertainty following U.S. President Donald Trump's decision to implement tariffs on China. For example, the U.S. Bureau of Economic Analysis reported (archived) on June 27, 2025, that the state'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. KLKN, a television station based in Lincoln, Nebraska, reported that this was due to higher costs and lower corn and soybean prices:
The report cited John Hansen, president of the Nebraska Farmers Union, as saying this was "the worst financial time for family farmers in decades." Meanwhile, in March 2025, WOWT, a news station in Omaha, Nebraska, cited the Nebraska Farm Bureau as saying that Nebraska farmers sell $2.1 billion in grains to China every year. The farmers were concerned then about a trade war between the U.S. and China.
Snopes contacted the Nebraska Farmers Union and the Nebraska Farm Bureau asking for clarity on the current situation and we will update this report should they respond.
Sources:
Biennial Budget State of Nebraska as Enacted in the 109th Legislature First Session. May 2025, nebraskalegislature.gov/pdf/reports/fiscal/2025budget.pdf. Accessed 19 Aug. 2025.
General Fund Financial Status. Nebraska Legislature, May 2025, nebraskalegislature.gov/FloorDocs/Current/PDF/Budget/status.pdf. Accessed 19 Aug. 2025.
General Fund Receipts — June 2025. 15 July 2025, revenue.nebraska.gov/sites/default/files/doc/news-release/gen-fund/2025/General_Fund_Receipts_News_Release_June_2025_Final_Copy.pdf. Accessed 19 Aug. 2025.
LTC. "Nebraska Constitution." Nebraskalegislature.gov, 2025, nebraskalegislature.gov/laws/articles.php?article=IV-7. Accessed 19 Aug. 2025.
---. "Nebraska Legislature." Nebraskalegislature.gov, 2025, nebraskalegislature.gov/laws/articles.php?article=XIII-1. Accessed 19 Aug. 2025.
Marin, Johan. "Nebraska Farmers in Limbo amid Chinese Tariffs against U.S. Farm Products." Https://Www.wowt.com, WOWT, 10 Mar. 2025, www.wowt.com/2025/03/10/nebraska-farmers-limbo-amid-chinese-tariffs-against-us-farm-products/. Accessed 19 Aug. 2025.
"Nebraska Economic Forecasting Advisory Board – April 2025 Meeting Report – Open Sky." Openskypolicy.org, 25 Apr. 2025, www.openskypolicy.org/nebraska-economic-forecasting-advisory-board-april-2025-meeting-report/. Accessed 19 Aug. 2025.
Phillips, Anna. "Nebraska's Surplus Turns to Shortfall after Tax Cuts and One-Time Windfall Fades | Center on Budget and Policy Priorities." Center on Budget and Policy Priorities, 17 June 2025, www.cbpp.org/blog/nebraskas-surplus-turns-to-shortfall-after-tax-cuts-and-one-time-windfall-fades. Accessed 19 Aug. 2025.
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