Nebraska revenue rises again

LINCOLN — Nebraska collected more tax revenue than predicted for a third month in a row, according to a report released Thursday.

The report eases worries that the the state budget situation will worsen, and it contains hopeful signs of economic recovery.

“I think it’s comparatively good news,” said State Tax Commissioner Doug Ewald.

Figures released by the state Department of Revenue show that net tax receipts for January were $290 million, which was 0.2 percent higher than expected.

Net receipts for the 2010-2011 fiscal year, which started in July, were $1.915 billion. That is 0.8 percent more than forecast.

Ewald called it a good sign that the state has brought in $16 million more than projections during the past three months.

State Sen. Lavon Heidemann of Elk Creek, the Appropriations Committee chairman, said the January receipts reflect increased optimism about the economy. But he doesn’t expect significant change in the state budget picture.

Nebraska faces an estimated $986 million shortfall for the next two-year budget period. That estimate is based on a tax revenue forecast issued at the end of November.

A preliminary budget proposal completed this week by the Appropriations Committee relies on a $256 million transfer from the cash reserve fund to balance the budget.

The budget proposal, which calls for 2.3 percent annual average growth in spending, is $11.1 million more than what Gov. Dave Heineman recommended.

The committee proposed slightly higher totals for Medicaid and school aid, while making deeper cuts in public assistance and using lottery dollars to support some state education programs.

Before making a final budget proposal to the full Legislature, the Appropriations Committee will hold public hearings and get a new revenue forecast.

The state’s official forecasting board will meet Feb. 25 to revise predictions for the rest of this fiscal year and for the next two-year budget period.

The January revenue report included a mix of above- and below-forecast numbers.

Sales tax receipts, which include revenues from the Christmas shopping season, came in below predictions.

Dave Dearmont, chief economist for the Revenue Department, said the predictions might have been overly optimistic. The state still collected 5 percent more sales taxes in December 2010 than in the same month a year earlier.

Individual income tax receipts, meanwhile, came in well above predictions. Gross receipts for the month were 9.9 percent higher than forecast, and net receipts were 6.7 percent higher.

Dearmont said some of the increase may be due to people making quarterly payments earlier than usual. But he also noted that individual income tax withholding for this year is running 5.25 percent higher than in the previous fiscal year.

Contact the writer:

402-473-9583, martha.stoddard@owh.com

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