Nebraska lawmakers will have a smaller-than-expected budget shortfall to fill when they convene in January, despite this year's extreme drought and worries about the nation's tax climate, according to new state revenue estimates released Friday.
LINCOLN, Neb. (AP) - The Nebraska Economic Forecasting Advisory Board approved estimates that will shrink Nebraska's budget shortfall for the two-year spending period that begins in July 2013. Lawmakers were expected to face a $624 million shortfall, but the new projections will reduce that by $231 million.
Board members expressed optimism Friday about the state's economic strength, despite the drought and scorching heat that threatened agriculture. Several said irrigation helped most farmers persist through this year's extreme weather, and statewide unemployment remains relatively low.
But they said businesses in their districts were nervous about national uncertainty over a series of federal spending cuts and tax breaks that are set to expire in 2013 unless Congress and the president act.
"Everyone is sitting on pins and needles with what's happening," said board member Thomas Henning, of Kearney.
Board member David Ochsner, a bank president from Nelson, said farmland values were still rising in his southern Nebraska district, but lenders and other businesses were sitting on large cash reserves and afraid to invest.
Board members estimated that the state will collect about $3.9 billion in taxes in fiscal year 2013, and nearly $4.1 billion in fiscal 2014. The revenue estimates include Gov. Dave Heineman's tax new cuts, which will cost the state about $97 million over a three-year period.
It also counts the cost of a new roads-funding law, a measure by Valentine Sen. Deb Fischer that will divert about $70 million in yearly sales-tax revenue from the general fund when it goes into effect in 2013.
State budget officials cautioned that the estimates will likely change once adjustments are made to the state's school-aid formula and other parts of the budget. Legislative Fiscal Analyst Michael Calvert said forecasting state revenue was complicated by Congressional inaction over the tax and spending cuts.
Advocates who were involved in previous budget talks released a joint statement Friday urging lawmakers to replenish the state's cash reserve and other programs whose budgets were cut. The coalition included advocates for the poor, children, public employees and schools.
"A 'steady as she goes' approach is in order," said Nancy Fulton, president of the Nebraska State Education Association.
(Copyright 2012 by The Associated Press. All Rights Reserved.)
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