LINCOLN- During their spring meeting in the Capitol on Thursday, the Nebraska Economic Forecasting Board increased its forecast of tax revenue by $90 million for the fiscal year ending June 30, while reducing the forecast for the next two years by $5 million, and holding projections for FY22-23 even.

The updated forecast also means a sizeable boost to the new property tax program, which offers income tax credits to property owners to offset part of their school property taxes. Lawmakers set aside $125 million for the first year of the program, which Nebraskans can claim when they file their 2020 income taxes. If actual tax revenue meets projections, a law passed last year would earmark $358.7 million for the new credits in each of the next two fiscal years. The law determines the amount of tax credits based on the growth of tax revenue. The credit total remains flat when revenue grows at 3.5% or less.

Both the governor and the Legislature use revenue projections issued by the forecasting board when setting the budget. The board will meet again in October to update its current numbers. Board members generally expressed optimism on the state’s economic future, despite ongoing disruptions from the pandemic and a large number of unknown factors.

“There’s some magic, some moxie somewhere in Nebraska that continues to outperform the national models,” said John Kuehn of Heartwell.

Some pointed to “cautionary notes,” including sharp increases in housing prices and in the cost of various goods and services and shortages of various items. They said workers continue to be in short supply, with about 25,000 people who have yet to return to the labor market since the start of the pandemic. The decreased outlook for the next fiscal year however means that members will have to adjust spending priorities to meet the new amount. To review the General Fund status with the new outlook, and to see the impact that pending tax and spending bills may have therein, please click HERE

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