Nebraska Budget Gap is Growing

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DALLAS – Lagging Nebraska tax revenue resulted in a new cut to the state's revenue forecast.

The Nebraska Economic Forecasting Advisory Board on Monday lowered the state's revenue forecast by another $153 million.

The latest revised forecast comes on top of the $134 million deficit the state was already facing in fiscal 2017. Together it means Nebraska faces a $288 million gap.

Revenue projections for the current fiscal year and FY2017-18 were lowered primarily based on anticipated decreases in individual income tax receipts of $55 million in FY2016-17 and $20 million in FY2017-18.

Total projected revenue receipts for FY2016-17 were lowered to $4.31 billion, a decrease of $91 million. Projected total revenue receipts for FY2017-18 were set at $4.51 billion, a decrease of $51.2 million.

In addition, overall projected revenue receipts for FY2018-19 were set at $4.73 billion, a $26.3 million decrease.

The preliminary budget put the state $134.7 million short of achieving the minimum cash reserve. The net impact of the revised forecast adds $152.9 million to that imbalance, which now totals $287.6 million.

"Today's adjusted forecast underscores the need for continued fiscal restraint from every single state-funded entity," said Gov. Pete Ricketts in a statement. "We must tighten our belts and balance the budget without raising taxes."

Last week Ricketts signed into law a bill to enact cuts to the state's fiscal 2017 budget.

The legislation cuts $137 million from the current year's budget while protecting K-12 education and the Department of Corrections.

In his January State of the State address, Ricketts unveiled budget plans that he said would allow Nebraska to balance the budget and address the revenue gap without raising taxes.

He has proposed increasing state aid to schools by 2.7% on average over the next two years, or nearly 60% faster than the rest of the state budget is growing.

The Legislature's Appropriations Committee is now considering Ricketts' recommendations for the next two-year budget for fiscal 2018 and 2019. It will release preliminary recommendations and hold hearings on the next two-year budget proposal before moving a budget package out of committee for consideration by the full Legislature.

State Sen. John Stinner, R-Gering, chairman of the appropriations committee, said the committee will monitor revenue through the rest of the session and look at other alternatives, such as additional cuts, to make up the difference. The rainy day fund will also have to be reconsidered, he said.

S&P Global Ratings assigns Nebraska an issuer credit rating of AAA. The state is not an active debt issuer because the state's constitution prohibits it from issuing general obligation bonds in excess of $100,000.

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