State's reserve account overflowing
Nebraska’s legislative leaders won’t speculate about the reasons for higher-than-expected tax revenues.
Wait until October, said Speaker Mike Flood and Appropriations Committee Chairman Lavon Heidemann.
The state will have better information on the income tax revenue this fall after the federal government releases its analysis. In addition, the state’s forecasting board will provide new revenue projections on Oct. 31.
“It’s too early to tell. Let’s see what the October forecast tells us,” said Flood.
One thing is clear, personal income tax revenue is the driving force behind this past fiscal year’s revenue growth.
Personal income tax revenue grew by 11 percent, and accounted for $96 million of the $117 million in surplus at the end of the year, according to a report given to a special legislative committee Wednesday.
But whether that growth is from farm income, capital gains or something else remains unknown.
The personal income growth reflects income earned in 2007 and paid in 2008, said Mike Calvert, chief fiscal analyst for the Legislature.
That growth is not an indication of the economy in 2008, he warned.
Nebraska is among a small group of states with higher-than-expected tax revenue and no serious financial problems.
Nebraska’s general fund revenue grew by 2.9 percent last fiscal year, which ended June 30. That slow growth was the result of income tax cuts made by the Legislature and governor in 2007.
The committee meets once a year to make sure there will be enough state tax revenue to meet state obligations during the next six months.
The committee has the authority to recommend a special session if the state faces serious financial problems.
There is no reason for a special session with $3.5 billion in general fund revenue and a $570 million cash reserve.
But the report to the committee did indicate the state will be in the red in two years if state spending continues to rise at its current rate.
That prediction assumes the Legislature and governor will continue a two-year property tax refund program.
That program provides a property tax credit of about 8 cents per-$100 valuation, or $80 a year for the owner of a home valued at $100,000. The credit costs about $115 million a year in state tax revenue.
Senators and the governor said the property tax credit program would continue after two years only if the economy was strong.
Neither Flood nor Heidemann would comment on the possibility of continuing that property tax cut.
“That (property tax decision) will be a lot clearer in October,” and after the forecasting board meetings in February and April, Heidemann said.
“We knew that (the property tax rebate program) was subject to the ups and downs of the economy,” Flood said.
Senators at the meeting also suggested the Legislature will need to be cautious about state spending next year.
Flood specifically mentioned high gas and food prices.
“People are hurting in this state,” he said.
Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.
Wait until October, said Speaker Mike Flood and Appropriations Committee Chairman Lavon Heidemann.
The state will have better information on the income tax revenue this fall after the federal government releases its analysis. In addition, the state’s forecasting board will provide new revenue projections on Oct. 31.
“It’s too early to tell. Let’s see what the October forecast tells us,” said Flood.
One thing is clear, personal income tax revenue is the driving force behind this past fiscal year’s revenue growth.
Personal income tax revenue grew by 11 percent, and accounted for $96 million of the $117 million in surplus at the end of the year, according to a report given to a special legislative committee Wednesday.
But whether that growth is from farm income, capital gains or something else remains unknown.
The personal income growth reflects income earned in 2007 and paid in 2008, said Mike Calvert, chief fiscal analyst for the Legislature.
That growth is not an indication of the economy in 2008, he warned.
Nebraska is among a small group of states with higher-than-expected tax revenue and no serious financial problems.
Nebraska’s general fund revenue grew by 2.9 percent last fiscal year, which ended June 30. That slow growth was the result of income tax cuts made by the Legislature and governor in 2007.
The committee meets once a year to make sure there will be enough state tax revenue to meet state obligations during the next six months.
The committee has the authority to recommend a special session if the state faces serious financial problems.
There is no reason for a special session with $3.5 billion in general fund revenue and a $570 million cash reserve.
But the report to the committee did indicate the state will be in the red in two years if state spending continues to rise at its current rate.
That prediction assumes the Legislature and governor will continue a two-year property tax refund program.
That program provides a property tax credit of about 8 cents per-$100 valuation, or $80 a year for the owner of a home valued at $100,000. The credit costs about $115 million a year in state tax revenue.
Senators and the governor said the property tax credit program would continue after two years only if the economy was strong.
Neither Flood nor Heidemann would comment on the possibility of continuing that property tax cut.
“That (property tax decision) will be a lot clearer in October,” and after the forecasting board meetings in February and April, Heidemann said.
“We knew that (the property tax rebate program) was subject to the ups and downs of the economy,” Flood said.
Senators at the meeting also suggested the Legislature will need to be cautious about state spending next year.
Flood specifically mentioned high gas and food prices.
“People are hurting in this state,” he said.
Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.
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