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LINCOLN — A new Nebraska economic forecast on Friday offered the Legislature up to $165 million in potential new revenue to help shrink the state’s anticipated budget shortfall.
Roughly $65 million of that additional revenue would be generated over the next two fiscal years, largely from projected increases in corporate tax collections. Those funds, plus recent budget tweaks recommended by the Legislature’s Appropriations Committee, have narrowed the state’s formerly $432 million budget shortfall to just under $200 million.
The Nebraska Economic Forecasting Advisory Board also increased, for the current fiscal year, how much it expects the state to collect in tax receipts by another $100 million.
If the Legislature pulls that money from the cash reserve, the remaining budget hole for the state to plug would fall to roughly $100 million.
That matters because the Legislature still has to close any gap to balance the biennial budget by its mid-May deadline.
Gov. Jim Pillen, in a statement, called the update good news: “A sign of Nebraska’s strong and resilient economy.”
He said the increases could help deliver “critical investments in education and property tax relief.”
Pillen and others noted, however, that months of wrangling still lie ahead as lawmakers and the Pillen administration seek to balance the budget while retaining funds for various agencies and operations affecting Nebraskans.
State Sen. Machaela Cavanaugh, a member of the Appropriations Committee, said she remains worried about Pillen’s efforts to shift dollars from cash funds and slash other programs — including several the state had already directed funding toward.
“I’m glad the deficit is smaller,” said the Omaha legislator. “I still think we’re not approaching the budget in a thoughtful manner.”
Cavanaugh said she remains concerned with the apparent “singular focus” by the Pillen administration on property tax relief, when, she said, the state doesn’t even set property taxes.
She sees current budget difficulties as a result of Pillen administration- led reductions in income and corporate taxes passed two years ago but that won’t be completely implemented for two more years.
Rebecca Firestone, executive director of OpenSky Policy Institute, attended Friday’s meeting of the forecasting board and reacted with cautious optimism.
