Nebraska tax revenue tops projections by 2.7 pct in August, brightening state budget pictureBy Josh Funk, AP
Friday, September 10, 2010
Neb. tax revenue beats projections in August
OMAHA, Neb. — Nebraska tax revenue beat projections in August for the first time since May, so the state budget picture looks a little better, according to a report released Friday.
The Nebraska Department of Revenue said net tax revenue topped projections by 2.7 percent last month.
The positive revenue report makes it less likely a special legislative session will be needed to address the budget.
But one positive month won’t solve everything. Lawmakers are likely to face a budget shortfall of several hundred million dollars when they meet in January to craft a two-year-budget.
“August receipts are good news, but one month is not a trend,” Gov. Dave Heineman said. “We will continue to monitor receipts very closely.”
Net revenue exceeded projections for all four state tax categories, including a jump in corporate income taxes, to help the state collect $322 million net revenue in August. The forecast was $313 million.
Tax Commissioner Doug Ewald said corporate tax payments were strong in August, and he expects them to remain strong this fall. He said many Nebraska businesses cut costs during the recession and have yet to begin widespread hiring, so they’re operating efficiently.
Ewald said the state received $6.6 million net corporate income taxes in August. That was well above the projected $710,000 because businesses paid more taxes than expected and the state issued fewer corporate refunds.
But corporate income taxes represent a relatively small part of state revenue. Sales and individual income taxes are the most important revenue categories because of their size. In August, Nebraska received $189.6 million net individual income tax and $111.8 million net sales tax.
Nebraska’s budget includes extra cash equal to 3 percent of the state’s general fund, and there is a separate emergency fund in the budget to help the state deal with lower-than-expected revenue.
But the state finished the 2009 fiscal year with $76.4 million less than what was projected by the Nebraska Economic Forecasting Advisory Board in February. And through the first two months of the current fiscal year, Nebraska tax revenue is running about 2 percent, or $10.5 million, behind projections.
Nebraska also will have to replace federal stimulus money in the state’s next budget.
The Nebraska forecasting board meets again this fall to revise its revenue projections.
Last November, Heineman called a special session to deal with a $334 million budget gap. Lawmakers approved across-the-board cuts to state agencies to close that budget deficit. And then during the regular legislative session that ended in April, another $48 million in cuts were approved.
Revenue report: www.revenue.ne.gov/research/gen_fund/nr0910.html
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