Forecasting board adjusts outlook

The Nebraska Economic Forecasting Advisory Board met on Feb. 29, to review the forecast for the current fiscal year and the next fiscal year. The board increased the previous forecast for fiscal year 2023-2024 by $575 million and decreased the previous forecast for fiscal year 2024-2025 by $525 million, for a total net increase of $50 million over the two-year period. Most of the increase can be attributed to increased receipts from corporate income taxes relative to individual income taxes since the board met last October.

Economic experts advise that the cash reserve fund should equal 12 to 16% of the budget. With the additional $50 million, the cash reserve is now equal to 16.6% of expenditures, which is a bit over where we should be.

With this revised forecast, as well as flush coffers, many senators and the governor believe it is time that the legislature take up additional property tax relief this year. Sen. Linehan, chair of the Revenue Committee, is working with many different groups to try to strike a balance for property tax relief in a manner that is fairer to everyone. For example, 4% of all people in Nebraska, primarily agriculture producers, pay about 24% of all property taxes levied in this state. In contrast, people in urban areas who rent do not directly pay property taxes but do pay income and sales taxes. So far, Linehan and the Revenue Committee have not come to a compromise to spread out property taxes more evenly across the state.

In the meantime, senators began work on the biennial budget adjustment bills introduced this year: LB1412 and LB1413. These bills were subject to many hours of work by the Appropriations Committee to make changes in how the state should spend the state’s money. The resulting work by the committee would make room for additional tax cuts while ensuring necessary services remained funded.

One common strategy by the committee was following a suggestion by Pillen to claw back or “sweep” around $200 million in extra funds held by state agencies sitting unused and instead direct those dollars to balance the two-year, $10 billion budget and help pay for property tax cuts. During floor debate, however, several senators argued against adopting the budget bills, contending that the Appropriations Committee did not do enough to fund assistance for developmental disabilities, behavioral health, unemployment insurance and court interpreters. The resulting filibuster over these issues resulted in few amendments to the budget bills being considered on the first round of consideration. Both bills were debated for many hours before being advanced by the legislature. Select file debate for the two budget bills will begin the following week.

Finally, the legislature took up its first veto override attempt of the year. Last year, Sen. Hunt introduced LB307, which would authorize cities and counties to create programs known as Syringe Service Programs, or SSPs. SSPs can provide a range of services, including substance use disorder treatment, distribution and disposal of sterile needles and syringes and vaccination, testing, care and treatment for infectious diseases. Hunt prioritized LB307 earlier this year where it survived three rounds of debate before being vetoed by the governor. I agree with Sen. Hunt that the legislature needs to explore policies to combat drug usage and disease transmission. However, conversations with constituents and the presentation of new information did not leave me 100% confident that LB307 as amended on Final Reading would not result in negative public health and social outcomes. After roughly two hours of discussion, LB307 failed to get the 30 votes necessary to override the governor’s veto in accordance with our state's constitution. I voted no on Sen. Hunt’s motion to override the governor’s veto.

You can always contact me with your thoughts and opinions on bills that have been introduced. Call my Capitol office telephone number at 402-471-2801 or send email to [email protected]. My mailing address is: Senator Barry DeKay, District #40, P.O. Box 94604, State Capitol, Lincoln, NE 68509.