Nebraska government's rainy-day fund will get a boost in tax revenue this year, based on new projections issued Thursday, but lawmakers still face a lot of uncertainty as they work to pass a new budget.
The Nebraska Economic Forecasting Advisory Board predicted the state will collect an additional $45 million in the current fiscal year.
State law requires that money to go into Nebraska's cash reserve, commonly known as the rainy-day fund, which has dwindled in recent years as lawmakers repeatedly drew from it to balance the budget.
The reserve held an unobligated balance of $296 million in January, down sharply from a record-high $729 million stashed away in 2016. With the new influx of expected money, it will rise to roughly $375 million.
Sen. John Stinner, the chairman of the Appropriations Committee, said the extra money will help after several years of tapping the fund to compensate for lower tax collections and a struggling farm economy.
"It puts the state's balance sheet in pretty good shape," he said.
Stinner, of Gering, said committee members still face a lot of unknowns as they fine-tune their budget recommendations before sending them to the full Legislature. For instance, lawmakers still don't know exactly how much they'll need to devote toward the state's school-aid formula. Another longer-term concern is the impact of last month's widespread flooding.
You have free articles remaining.
The new estimates prompted Gov. Pete Ricketts to call on lawmakers to fully fund his request for $51 million to the state's property tax credit fund, which is used to reduce property tax bills. The Appropriations Committee has voted to boost the fund by $26 million.
"Today's forecast is good news for property tax relief," Ricketts said.
A Nebraska tax policy organization cautioned, however, that the boost in funding is likely a one-time occurrence driven by the 2017 federal tax overhaul and not a reflection of a strengthening economy.
"Approving current proposals to bolster our cash reserve and conduct budget stress testing will help the Legislature ensure we stay on solid fiscal ground in all economic conditions," said Renee Fry, executive director of the OpenSky Policy Institute.
With the additional money, Nebraska is expected to collect a total of $4.765 billion in the current fiscal year. For the next fiscal year, forecasting board members raised their predictions by $10 million, from $4.87 billion to $4.88 billion. In the fiscal year after that, they held their estimate flat at nearly $5 billion in total revenue.
The conservative forecast was driven by uncertainty about the flood's impact on Nebraska and the struggling farm economy.
Board member John Kuehn said rural Nebraska is maintaining a strong sense of optimism, but "underneath that is a lot of uncertainty and tension."
Board member Steven Seline said he was concerned that Nebraska's severe workforce shortage could prompt businesses to move jobs to other states with higher unemployment.