The Nebraska Economic Forecasting Advisory Board has raised its projections for state revenue by $775-million dollars from its October forecast with another $370-million in the current fiscal year and $405-million in the year starting July 1st.
That means Nebraska lawmakers should have nearly $500 million dollars in extra tax revenue for spending or tax-cut measures this year plus a record-high $1.7 billion in the state’s cash reserve fund.
The rosy outlook came despite huge uncertainty about inflation, global supply chain problems, a statewide worker and housing shortage and the growing Russian conflict in Ukraine, all of which could rock Nebraska’s economy.
Forecasting Board Chairman Jerome Deichert says “In all the time I’ve been on the board, this is the most uncertainty that I can remember,” but the board felt strongly about the trillions in federal pandemic aid pumped into the economy.
Governor Pete Ricketts is taking the revenue projections as a green light to move forward with a wide range of proposals, saying “we don’t have to choose between income tax relief and property tax relief, there is room for both.”
Ricketts also says the “unprecedented tax revenues” come at a time when “it’s also critical that we fully finance the Perkins County Canal and the Nebraska State Penitentiary for the safety and security of future Nebraskans.”
Not everyone is embracing the “we’ve got plenty coming in” attitude. OpenSky Policy Institute Executive Director Rebecca Firestone warns that the state and national economies are in a “fiscal bubble (because) we are in unprecedented times.”
Firestone says the uncertainty expressed by Deichert and other forecasting board members and the fact that revenues are “impacted by a range of factors beyond the control of the Legislature” calls for caution toward ongoing tax or spending measures because they will force tough choices when revenues eventually fail to keep up.