Nebraska's economic forecasters were feeling optimistic on Thursday and revised their predictions for tax collections for this two-year budget upward.
Eight members of the Nebraska Economic Forecasting Advisory Board said collections would be enough in the rest of this fiscal year to add $161 million to the state's rainy day fund. And in 2020-21, lawmakers would get an added $102 million for the state budget, after accounting adjustments and if the predictions come to pass.
The forecasting board's estimates are used to determine how much tax money the Legislature has to shape its state budget. The forecasters projected tax collections of $5.1 billion for this fiscal year and $5.15 billion in 2020-21.
Almost all of the forecasters, who come from different parts of the state, said most areas are doing well economically, some even thriving, even though it's been a rough-and-tumble year for some areas with extreme weather and other issues.
"Harvest is well underway in greater Nebraska and I think that has created a sense of optimism," said former state Sen. John Kuehn of Heartwell, who is now a member of the forecasting board.
But a lot will depend on the success of those harvests and how the markets hold, he said.
Kearney suffered a lot of property damage from flooding in July, but almost all the lodging rooms and a conference center are now back up and running, said board member Richard McGinnis of Kearney. But there was a loss of sales tax from the problems.
State tax collections have been ticking up in recent months. In September, the state collected $552 million in net revenue, 8.2% higher than the forecast of $510 million.
The projected $161 million influx would bring the cash reserve to $616 million.
Gov. Pete Ricketts said the new forecast "will allow property tax relief to move full steam ahead during the upcoming legislative session.”
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The Legislature's Revenue Chairwoman Lou Ann Linehan echoed the governor's call for using any extra money for tax cuts.
The form of that "tax relief" is still under discussion, she said, but she favors doing "as much as we can do," she said.
The two-year budget passed last year was meant to make up for previous tough years, she said, so any available funds over what has been budgeted should be used for those tax cuts.
"I don't think there's any needs that we know of today that we didn't know of a year ago when we did the budget," she said.
The Legislature increased Medicaid provider rates, fully funded K-12 state aid to schools, gave the University of Nebraska money for salary increases and for increases in utility costs. It also sent an additional $51 million a year to the state's property tax credit fund, which is used to reduce the amount owed on property tax bills.
"Last year's budget was a good budget," Linehan said.
This added projected revenue makes it easier to go about reducing the tax load on Nebraskans even more, she said.
Appropriations Chairman John Stinner said his committee will work with the governor and Legislature on a fair and balanced approach to spending. They still need to increase the rainy day fund, he said, and also provide funding for the effects of flooding.
And he remains concerned about budget revisions that may be needed because of the circumstances surrounding agriculture in the state.
OpenSky Policy Institute Executive Director Renee Fry said the board's increased forecast presents an opportunity for lawmakers to build the state's cash reserve, which she said was drawn down well below recommended levels to make up for recent state revenue struggles.
"It would be extremely risky to use what could be a temporary uptick in revenue to fund ongoing spending obligations or tax cuts,” Fry said.