Nebraska state revenue jumps $55 million in current budget
LINCOLN, Neb. (AP) — Nebraska is expected to gain an additional $55 million in tax revenue in its current two-year budget, according to new estimates approved Wednesday, but lawmakers still won’t have much money at their disposal.
Senators will now have a little less than $627,000 available for new spending in this year’s session, based on the tentative budget crafted by the Legislature’s Appropriations Committee. Committee members updated their proposed spending plan in response to Wednesday’s projections by the Nebraska Economic Forecasting Advisory Board.
Lawmakers faced a projected $173 million revenue shortfall at the beginning of this year’s session, and the current budget-balancing proposal draws heavily from Nebraska’s emergency cash reserve fund to make up the difference.
Sen. John Stinner of Gering, the Appropriations Committee chairman, said replenishing some of the money lawmakers withdrew was his top concern because state revenues could continue to struggle.
“I think we have to be careful and prudent about how we treat this,” Stinner said.
In a statement, Gov. Pete Ricketts sounded a similar note of caution and said the agencies he controls will continue to restrain their spending.
“These new numbers seem to indicate a growing economy, but we must remain cautious through the end of the fiscal year,” he said. The money that flows automatically to the cash reserve “should not be used for spending.”
The forecasting board predicted that Nebraska state government will collect $4.53 billion in the current fiscal year, a $25 million increase over its previous projections. By law, that money will automatically go into the cash reserve.
The state is also expected to receive $4.705 billion in the next fiscal year, which is $30 million higher than earlier estimates.
Complicating the issue is the prospect that federal tax changes approved by President Donald Trump and the Republican-controlled Congress could leave the state with an additional $335 million in state tax revenue.
Because Nebraska’s tax system is closely tied with the federal system, the federal law is set to trigger a series of automatic tax increases in Nebraska by eliminating the personal exemption and increasing the standard deduction. A Nebraska family of four would pay at least $536 more in state taxes each year.
Ricketts has proposed a bill that would neutralize most of those changes, although the state is still expected to see an $8 million boost in corporate income tax revenue.
Even so, the federal tax changes have created a great deal of uncertainty for Nebraska’s budget, said Renee Fry, executive director of the OpenSky Policy Institute.
“Today’s revenue forecast is welcome news considering our recent revenue struggles, but it must be taken with a grain of salt,” Fry said.
Members of the forecasting board said Nebraska’s economy appears to be faring well, and some suggested that agriculture might be recovering after several years of low commodity prices.
“There are some people who are still struggling in the ag sector, but I think overall it has stabilized,” said board member David Ochsner of Nelson.
Board member Richard McGinnis of Kearney warned that proposed cuts to the University of Nebraska could harm his local economy in central Nebraska.
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