Nebraska lawmakers to need another $50M to balance budget

Nebraska lawmakers who worked to erase a nearly $900 million projected revenue shortfall will have to come up with another $50 million to balance the state budget.

The Nebraska Economic Forecasting Advisory Board set new revenue estimates on Wednesday, predicting the state will collect $4.3 billion in the current fiscal year and $9.2 billion in the upcoming two-year budget cycle that starts July 1.

The new projections will wipe out the $3.5 million that the budget-writing Appropriations Committee had set aside for legislation in this year's session.

They also will force lawmakers to cut more, dip again into the state's rainy-day fund or pass a law that would temporarily lower the minimum amount of money lawmakers have to keep in the general fund, said Sen. John Stinner, the committee chairman.

The rainy-day fund had been projected to reach a record high of $729 million in June 2016, but is now expected to slip to $379 million by June 2019 because senators have repeatedly used it.

"It's not a disaster, but it is another hurdle," Stinner said.

Lawmakers also could raise taxes, but such an approach is unlikely to pass with a conservative-dominated Legislature and Republican Gov. Pete Ricketts opposed to any increases.

"Clearly, additional spending reductions are required," Ricketts said in a statement.

Lawmakers faced an unusually large projected shortfall this year in part because of falling commodity prices that hurt agriculture, the state's largest industry. Because of the slowdown, state spending is projected to outpace revenue.

Forecasting board members offered differing views on the state economy. Members from Nebraska's larger cities offered a positive outlook, while rural members warned of a struggling farm economy.

"Things are a little challenging out there" in rural Nebraska, said board member Fred Lockwood, of Scottsbluff.

Board member David Ochsner, of Nelson, predicted that the state farm economy might remain stagnant unless another part of the world is disrupted by a weather disaster.

But board member Thomas Henning said the economy in the tri-cities of central Nebraska — Grand Island, Kearney and Hastings — is thriving. Henning said the area is still struggling to meet the need for affordable housing and a skilled workforce.

"There are a lot of good things happening. ... Hopefully what's happening in the cities can offset what's happening in farm economies," he said.

Nebraska's economy is also growing unevenly, which is affecting tax collections, said Hoa Phu Tran, a Nebraska Department of Revenue economist. The state economy used to rely heavily on producing goods, which are often taxed, but it now depends more on services, which aren't taxed as frequently, he said.


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