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Nebraska took in almost $6 billion in tax revenue last fiscal year, a big increase

Nebraska took in almost $6 billion in tax revenue last fiscal year, a big increase

President Joe Biden delivers remarks Friday on the June jobs report after American employers added 850,000 jobs in June, well above the average of the previous three months and a sign that companies may be having an easier time finding enough workers to fill open jobs.

LINCOLN — Nebraska ended its fiscal year with a historic spike in revenue that will mean record relief for property taxpayers next year.

The State Department of Revenue reported Thursday that Nebraska collected $5.959 billion in taxes in the year that ended June 30. That’s up more than $1 billion compared with the previous fiscal year — a 20.6% boost.

As a result, the state’s new property tax relief program will more than quadruple in size, growing from $125 million in the just-ended fiscal year to $548 million in the current year. The program provides income tax credits to Nebraska property owners to offset a portion of their school property tax bills.

Through the program, property taxpayers got back about 6% of their school tax bill when they filed their 2020 income taxes. The year-end state revenue figure means that those same property owners will get credits equal to about a quarter of school property taxes when they file their 2021 income taxes.

Gov. Pete Ricketts celebrated the news, which means that the state would provide almost $1 billion worth of property tax relief in the current fiscal year. In addition to the new program, the state will provide $300 million through a longstanding separate property tax credit program and $104 million through a homestead exemption program benefiting low-income elderly and disabled homeowners.

“Nebraskans weathered the pandemic with grit and determination,” he said in a statement. “Our economy has powered through the uncertainty of the last year, and that is resulting in significant growth in state revenues. Thanks to (Legislative Bill) 1107, which I signed into law last year, higher state revenues have created record property tax relief for our farmers, ranchers, homeowners and small businesses.”

LB 1107 determines the amount of income tax credits for property taxpayers based on the growth of state tax revenue. The credit total remains flat when revenue grows at 3.5% or less. Half of the increase above 3.5% will go into the state’s cash reserve.

State Sen. John Stinner of Gering, the Appropriations Committee chairman, warned that one-time factors, not ongoing economic growth, accounted for much of the jump in revenue.

“I’m not looking a gift horse in the mouth, but I’m sounding a cautionary note,” he said.

Stinner estimated that about half of the increase could be traced to federal coronavirus relief funds. Stimulus payments to families, for example, helped boost sales tax collections. In addition, moving the income tax deadline to July accounted for $280 million being collected in fiscal year 2020-21 instead of the previous year.

He said policymakers will have to be cautious next year about making long-term tax cuts or new spending commitments based on last fiscal year’s revenue. Current projections call for a decrease in tax collections during the fiscal year that began July 1.

But Stinner was pleased that, under state law, a large portion of the revenue spike will go into the cash reserve, bringing it to a record $997 million. He said the money could help the state address challenges, such as its overcrowded prison system.

Among others, Mark McHargue, president of the Nebraska Farm Bureau, called the revenue numbers “a big win” for property taxpayers.

“Today is a good day for all Nebraskans who have continued to bear the brunt of high property taxes, particularly our state’s farm and ranch families,” he said.

Jim Vokal, CEO of the Platte Institute, said the healthy revenue figures and solid cash reserve mean that Nebraska is in a good position to revamp its tax system, including broadening its sales tax base.

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Martha Stoddard keeps legislators honest from The World-Herald's Lincoln bureau, where she covers news from the State Capitol. Follow her on Twitter @StoddardOWH. Phone: 402-670-2402

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