Revenue forecast improves for the state
February 25th, 2011
Lincoln, NE – The Economic Forecasting Advisory Board has raised its projection of how much tax revenue the state will collect over the next two years.
Nearly $50 million – that’s how much more the Forecasting Board projects in state revenue for fiscal years 2011, 2012 and 2013, compared to what its projections were last October. That’s an increase of less than 0.5 percent. But it reflects a certain amount of economic optimism among board members like Tom Henning, president of the Cash Wa food distribution company in Kearney. Henning says a number of factors have combined to create favorable conditions.
“I think things have spiked up. There’s more enthusiasm,” said Henning. “I think there’s two or three things that are real critical. Number one, agriculture has had a heck of a good year, with farm prices the way they are, farmers are paying down their operating loans at the banks. In fact, there’s banks wondering who they’re going to loan money. You know, they’ve got quite a bit of money to loan.”
Henning also cited the extension of the Bush-era tax cuts as contributing to optimism. But another board member, Rick Kolkman, president of the First National Bank in North Platte, said he thinks revenues might actually decline. Kolkman pointed to the rising cost of fuel, which he said could cut into farm profits and other economic activity.
“With all the distances in this state, and the huge railroad presences we have throughout the state, fuel is just a major, major part of the economy,” said Kolkman. “Then tourism is another aspect. When you get up toward $4 gas, as is being speculated right now, people don’t travel as much. We are heavily dependent on tourism, especially along the I-80 corridor.”
For now, the $50 million increase will be added to the projected $1 million state surplus in the Appropriations Committee’s preliminary budget proposal. That proposal eliminates what had been a nearly $1 billion projected budget gap, by cutting funding for schools, Medicare providers, and a host of others. Advocates are likely to use the new projection as an argument to lessen those cuts. The board’s scheduled to meet once more in late April before final budget decisions are made.
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