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The Nebraska Forecasting Advisory Board meets periodically to forecast (or guess) how much money they think will be coming into the State’s general fund. Lawmakers use these projections to craft the State’s biennial budget. On October 27 the Nebraska Economic Forecasting Advisory Board met at the State Capitol and voted to lower its revenue projections. This is not good news for our State.
The revenue projections were lowered because the board members believe that individual incomes are decreasing, not increasing. Revenue collected from individual income taxes makes up more than 50% of the State’s general fund.
For the 2017-2018 fiscal year, the board projected that income tax receipts would fall short by $115 million. So, the board revised the total projected revenue receipts for the 2017-2018 fiscal year, lowering them to $4.5 billion, which is a decrease of $100 million.
The board also projected that income tax receipts for the 2018-2019 fiscal year would fall short by $125 million. So, they revised the projected total revenue receipts for the 2018-2019 fiscal year to $4.7 billion, which is a decrease of $123 million.
These revised forecasts mean that the projected general fund financial status is actually $194.4 million short of the minimum statutory cash reserve. Last year I proposed my own budgetary fix to the problem, which received 19 votes, and in May I said the board’s forecasts were too generous and that we needed to cut the budget by another $250 million. Regardless, lawmakers will be forced to make these additional cuts to the budget come January.
Because revenues are projected to be down, the Legislature won’t be passing any bills next year which come with a fiscal note. Instead, lawmakers will be forced to look for ways to cut spending from the State’s biennial budget. The State has been in this type of revenue shortfall before and we worked our way out it. We can, and we will work our way out of it again.