It doesn’t take a crystal ball to tell you that farmers are hurting – reeling from a double whammy of low commodity prices and high property taxes. The latest meeting of the Nebraska Economic Forecasting Advisory Board has done little to make things brighter.
During its October meeting, the Board voted to lower revenue projections for 2017-18 by $100 million and for 2018-19 by $123 million. Clearer, but not brighter.
The board provides an advisory forecast of general fund receipts used by the Legislature to craft the state’s budget. The forecast is also used by the governor to sharpen his cutting skills, which he did with a directive to state agencies under his control.
The Governor’s directive outlined budget restraint actions covering the following areas: quarterly allotments of current appropriations to state agencies, boards and commissions will be reduced by one percent to incentivize additional spending restraint; agencies have been advised to prepare for further budget reductions; continued hiring freeze, travel ban, limited equipment purchases and reductions in discretionary grants in aid.
Total projected revenue receipts for FY2017-18 were lowered to $4.5 billion and $4.7 billion for the following year. The end result of the revised forecast is a projected general fund financial status that is $194.4 million short of the constitutionally directed minimum statutory cash reserve.
Results of the forecast and other pending adjustments will be reviewed during a mid-November meeting of the Tax Rate Review Committee made up of chairs of several key legislative committees and officials from the state Department of Revenue. The next Nebraska Economic Forecasting Board meeting is scheduled for Feb. 28th, during the first session of the 106th Legislature.
This casts the session spotlight on taxes and the budget. But one can’t forget about a troubled prison system that is already exempt from Governor Ricketts’ afore-mentioned budget restraints. The Department of Corrections needs more money for staffing which some believe will solve the woes of a drastically overcrowded system – the second worst in the United States – and the increasing number of violent attacks by inmates on staff and inmates on inmates.
I didn’t say that I’m buying their idea as the solution. But there is the matter of a pending lawsuit that could force DOC to look hard at alternative sentencing, early release of non-violent offenders or construction of more prisons. That situation should hang like a black cloud over the Legislature’s consideration of any other business.
Things are further complicated by Ricketts’ penchant for income tax relief – when the majority is clamoring for property tax relief – and his resistance to corrections in sales tax measures, which could go a long way toward bolstering an otherwise anemic revenue stream. He has said he is against a bill that would mandate collection of sales tax on internet sales and also considers the removal of existing tax exemptions as a blatant increase in taxes.
He said that he and the Legislature have successfully worked together to constrain spending and cut the rate of growth in government from 6.5 percent to 0.6 percent. He said when revenues fall short of forecasts, Nebraskans expect state government to exhibit the same fiscal restraint as they do in their own households.
My questions: How much more can you cut before the bleeding begins? When the bleeding begins, how do you stop it? Ask the governors of Kansas and Oklahoma. When do we focus on increasing the income side of the equation?
Even State Tax Commissioner Tony Fulton – a former state senator – admits that Nebraska has some questionable tax exemptions. Then there’s the issue of collecting the state sales taxes that already are legally owed for online purchases on the Internet. State officials estimate that could bring an additional $30 million to $40 million into the state coffers. But Ricketts opposed a bill to do just that last session and the matter stalled.
Enough with the cutting already. Let’s sacrifice some sacred cows and bring money into the revenue stream. The time to act is now.
J.L. Schmidt is the statehouse correspondent for the Nebraska Press Association. He has been covering Nebraska government and politics since 1979. He has been a registered independent for 18 years.