Nebraska finished its 2012-13 fiscal year last month by collecting more in taxes than forecast.
That prompted Gov. Dave Heineman to call, once again, for the Legislature to make tax relief a priority in the 2014 session that begins in January.
In the meantime, senators will begin meeting Wednesday to talk about tax reform.
Net general fund tax receipts for the year were $4.05 billion, 7.6 percent above the forecast of $3.77 billion certified by the Nebraska Economic Forecasting Advisory Board.
Heineman said Nebraska's rainy-day fund, or cash reserve, will be about $679 million after transfers are made.
"With the largest cash reserve the state has ever had and a consistently improving economy, it is time to provide the citizens of Nebraska tax relief," he said.
Appropriations Chairman Heath Mello said the fact that tax collections exceeded expectations reinforces the Legislature's decision this session to rebuild the cash reserve.
“As we discussed during the budget debate this year, I anticipate the Legislature utilizing the cash reserve for responsible tax reform proposals next year,” Mello said.
Omaha Sen. Jeremy Nordquist, a member of the Legislature's Appropriations Committee, said it was important to look at the economic and tax news in context.
"While our cash reserve fund is hitting a record high, the Douglas County Board just voted (Tuesday) to raise property taxes," he said.
The Legislature's decision to eliminate aid to cities and counties is having a negative effect on property taxes, Nordquist said. Because the lowest ranking on the Tax Foundation survey is property taxes, that has to be the Legislature's focus.
Also, CNBC has ranked Nebraska the fourth best state for business, up from sixth in 2012.
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"Clearly, this helps make the case against any radical transformation of our tax system," Nordquist said. "Nebraska is a great state for business and has a strong cash reserve, so let's focus on property tax relief."
For June, the last month of the fiscal year, the state's net tax receipts were $390 million, or 7.7 percent above the forecast of $362 million. Net sales tax collections were down 5 percent, but individual, corporate and miscellaneous collections all were above forecast.
Tax Commissioner Doug Ewald said June was a good month, indicative of the past year and a mirror image of the percentage increase for the year.
Tax receipts for the past fiscal year were just short of 10 percent higher than the prior fiscal year. They likely won't continue to increase at that rate, because part of that increase involved a sell-off of capital gains at the end of 2012.
"We can't take that to the bank on a recurring basis," he said.
But the record amount in the cash reserve is good for the state.
"That's good for the tax reform commission to know how much is sitting there heading into the first meeting," he said.
And the question then is, how much does that safety net need to be and how much should the state spend on tax reform going forward? he said.
The Legislature's Tax Modernization Committee will meet Wednesday at 10 a.m. at the Capitol, Room 1113, to begin examining the state's tax code and to make recommendations to senators if changes are needed.
The morning and afternoon meetings also will be streamed live by NETV and can be found at www.netnebraska.org/basic-page/television/live-demand.
The afternoon session, beginning at 1:30 p.m., will focus on sales tax.