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Office of Governor Pete Ricketts

Revised State Forecast

By Governor Pete Ricketts
March 1, 2016

 

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Balancing your budget.  It’s something every Nebraska family has to do, and it’s what the Legislature and I have been working to do together this legislative session.  At the beginning of this session, we faced a $150 million revenue shortfall due in part to slowed economic growth in the ag sector, our state’s largest industry.  The budget I introduced at the beginning of session addressed this shortfall by tightening our belts, returning unspent dollars, and making transfers from banking and insurance cash funds.

Last week, the Nebraska Economic Forecasting Advisory Board projected a slight uptick in the economic outlook and revenue for the year.  The board revised the forecasted state general fund tax receipts for fiscal year 2015-2016 upwards by $17 million.  By state law, this additional revenue will be transferred to the cash reserve, which has grown to almost $750 million.  The board also slightly revised its forecast of general fund revenue for the next fiscal year, 2016-2017, upwards by close to $13 million.

This news reaffirms that the Legislature and I will be able to deliver property tax relief for hardworking Nebraska property owners and families.  The news, however, should not be viewed as an opportunity to increase state spending.  Restraining the growth in spending is key to providing tax relief.  Increasing spending right now not only misses an opportunity to provide tax relief, but it also grows the size of state government.  Our state’s focus should continue to be on constraining state spending—not growing it.

With the goal of slowing the growth of government and constraining spending, we need to set spending priorities that make government work for the people and Grow Nebraska.  I have aimed to do this by prioritizing tax relief, starting with property taxes, and by holding the growth in government spending to around three and a half percent or less.

My top priority this legislative session is to deliver tax relief to Nebraskans.  Not only are you overtaxed, but addressing the high tax burden of our state will help us attract new residents and companies.  As I travel across this state there is no issue that comes up more than property taxes.  This issue is urgent in both our urban and rural areas.  Commercial property owners, ag producers, individuals on fixed incomes, homeowners and families who are working to own a home—they need additional property tax relief.

With property taxes still on the rise, people bring their tax statements to show me that they are literally looking at selling the farm their family homesteaded.  Last year, I worked with the Unicameral to provide $408 million in direct dollar-for-dollar property tax relief through the Property Tax Credit Relief Fund.  This year, we must make structural changes to property taxes.  As you know, the state’s role is limited in property taxes because we do not levy or collect them.  We do, however, play a role in setting controls for our local government partners.

I believe we can get something meaningful done on property taxes this year.  It will require local governments and school districts to come to the table and agree to manage the future increase in their budget growth.  Taxpayers deserve nothing less.  This proposal is a measured one that is achieved by slowing the rate of growth in spending.  This property tax relief proposal is meaningful, structural, and sustainable.

In addition to tax relief, one of the ways we can Grow Nebraska this year is a responsible investment in priority infrastructure projects.  Our three largest industries are agriculture, manufacturing, and tourism and they all require a strong transportation infrastructure to expand.  That’s why we proposed the Transportation Innovation Act, also known as the transportation infrastructure bank, to speed up expressway construction, improve county bridges, and assist companies with economic development.  This is a great way to invest in growing our state for future generations in a fiscally-responsible manner.

In my budget, I also included a request to address infrastructure needs within the Department of Corrections to allow corrections staff to focus on reducing the likelihood of repeat offenders and providing the best chance of a positive reentry to society for inmates.  Addressing recidivism is one way we can protect public safety in our state, which is key to ensuring that families and businesses want to continue to live and grow in our state.

I will continue to work with the Appropriations Committee and the Legislature to pass a balanced budget that holds the rate of growth in spending to about three and a half percent.  My approach is to set spending priorities that Grow Nebraska and I believe any additional revenue should be returned to the people through tax relief, and not spent on growing state government.

 

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