Nebraska now faces a projected $101.6 million dollar budget shortfall despite finishing the just-completed fiscal year with nearly a billion dollars more in tax collections than expected.
The reason is a new state law creating a new income tax credit for school property taxes paid by landowners. The money available for the tax credit program grows when state tax revenues increase.
Under that law, all of the excess money will be split between property tax credits and the state’s cash reserve, also known as the rainy-day fund.
The boost in revenue will mean a bigger tax credit for homeowners and a record-high rainy-day fund for the state, but could mean a tighter general fund budget.