After I read through my copy of this year’s proposed biennial budget, I knew I would have to speak out. I knew long before the proposed budget ever came out that tax revenues would be down this year. I based my conclusions upon what I saw happening in agriculture. Contrary to the opinion of some of my colleagues in the Nebraska Legislature, I know that agriculture is the engine which drives our State’s economy. Commodity prices have been low, farmers have been struggling to pay their property taxes, and agricultural land valuations have unfairly raised the market value of agricultural land for property tax purposes. With these conditions in place, I figured something had to give.

Two weeks ago I spoke out on the floor of the Nebraska Legislature and pointed out the fallacy in the proposed biennial budget. The problem is that the proposed budget assumes a five percent increase in tax revenues. The economist, Thomas Sowell, pointed out this kind of economic fallacy on the federal level back in December 2012 when he said, “The Congressional Budget Office has been embarrassed repeatedly by making projections based on the assumption that tax revenues and tax rates move in the same direction.” They do not. The State’s budget should be based upon real numbers, not projected increases in tax revenues, which are nothing more than speculative and hopeful guesses. Therefore, I made the suggestion that we should resort to using last year’s budget, save for the Department of Corrections and the salaries of State employees.

Last Wednesday my previous comments on the floor were validated by the hard numbers of our most recent tax receipts. Overall, receipts for the General fund are down 11.4%. Bad economic news for the month of April prompted Governor Ricketts to hold a special news conference on Thursday to address the problem of our budgetary shortfall. According to the Governor, tax receipts have fallen short of their projected income 14 out of the last 22 months, and revenues for April fell short of their projected goal by $55.5 million. After the Forecasting Board revised their projections for the year, it was determined that the State would need $835 million over the course of the next two months in order to put us back on track. However, revenues for May and June from the previous year had only brought in $793 million. So, the reality is that our revenues have been going down, not up. Therefore, it makes no sense to continue spending by a budget which assumes a 5% increase in tax revenues.

It is my firm conviction that State Senators will be called back to Lincoln in the fall to reconcile our budgetary problems. If we wait until the fall, as I believe we will, we will be forced to make deep cuts into our State’s budget. All four appropriations bills have now been approved in the State Legislature. Therefore, it is up to the Governor to make the necessary cuts in order to save a special session of the Legislature later this year. Governor Ricketts may use his line item veto to make the necessary cuts in the budget or he may call the Senators back in a few months to fix the problem.