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The Nebraska Economic Forecasting Advisory Board met on Friday, February 28, to review their forecast for the current fiscal year and the next fiscal year. The board increased the previous forecast by $115 million for fiscal year 2019-20 and by $25 million for fiscal year 2020-21, for a total increase of $140 million over the two-year period. Most of the increase can be attributed to year-to-date actual receipts, as revenues from November through February were $111 million above the October forecast.
The $115 million increase for the current fiscal year is above the forecast certified in July and by statute, revenues above the certified forecast go to the Cash Reserve Fund. This increased the unobligated balance of the Cash Reserve Fund to $731 million. The $25 million increase in next fiscal year’s forecast will be retained in the General Fund, increasing the variance from the required 3% minimum reserve for the current biennial budget.
Economic experts advise that a cash reserve fund should equal 12-16% of the budget. With the additional $115 million, it brings the cash reserve to 14%, which is right where we should be.
With the revised positive forecast, it makes it even more imperative that the Legislature passes property tax relief yet this year. Senator Lou Ann Linehan, chair of the Revenue Committee, is working with school districts in an attempt to address their concerns with LB 974, but hasn’t reached a compromise at this time. Other property tax relief options waiting in the background are LB 1073, introduced by Bennington Senator Wendy DeBoer, LB 930 introduced by Albion Senator Tom Briese, and LR 300 CA, introduced by Bayard Senator Steve Erdman.
Under LB 1073, the valuation of agricultural land would be lowered from 75% to 55% of its actual value within the school funding formula, the local effort rate would be decreased from $1.00 to $0.99, and basic funding aid would be incorporated into the formula. This basic funding aid would provide new state aid to non-equalized school districts, amounting to 7.5% of the basic funding of each school district. LB 930 provides a statutory minimum of $275 million for the Property Tax Credit Fund. This bill could be a vehicle for other proposals as well. LR 300 is a constitutional amendment to repeal the sales, income and property taxes, replacing them with a consumption tax on new goods and services.
I had the opportunity to tour the new addition of the O’Neill Public High School. I was very impressed with the planning that went into the project. The administration, teachers and students were all very proud of their new school.
As legislators continue in full-day debate, I encourage you to contact me with your thoughts and opinions on the legislation that is before us. I can be reached at District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is email@example.com and my telephone number is (402) 471-2801.