boost state economic forecast, Projected higher income tax receipts ; Gas and food price increases in recent months aside, Nebraska economic forecasters on Thursday said they see improvements in the state's economy. And they made their optimism official, projecting an increase in the overall amount of revenue the state will bring in the rest of this year and in the 2011-13 budget years.
Some of the board's positive outlook came from what the state Department of Revenue said it has seen since April 18 in individual income tax growth.
But there are other defining factors that the six members of the Nebraska Economic Forecasting Advisory Board considered in projecting an $82.5 million increase in revenue for this fiscal year, and a $146.5 million net gain to the state's bottom line in the two years after.
It's been another banner year in agriculture in Nebraska. Oil lease payments in western Nebraska are up and ag-related businesses are doing well, forecasting board members said.
Commercial construction around Lincoln is great, said Steve Ferris. And in Omaha, residential real estate is turning around, Leslie Anderson said.
At the same time, there were some concerns about inflation and worry about increased food costs and fuel prices, which are forecast to rise. But the rise in grocery and gas prices don't affect state sales tax receipts, unless they affect sales of other items.
Overall, board members said they are optimistic that the economy is starting to turn around.
Gov. Dave Heineman was cautious about the brighter forecast.
"Two months of above-average receipts is not a trend," Heineman said. "It's good news, but any additional new revenue at this time should be used to rebuild the cash reserve."
The cash reserve is what officials believe saved the state from a worse economic fate as it climbs out of the recession.
The extra money forecast for this year, if it comes through, would go into the cash reserve, which has been drawn down to help balance the 2011-13 proposed state budget.
Sen. Lavon Heidemann, chairman of the Legislature's Appropriations Committee, said any money the state collects as a result of the improved forecast in the next two years should go back to the cash reserve. It's projected to be $65.7 million by 2013, after $256 million is drawn down.
The Appropriations Committee has worked hard in the past four months to put together a responsible 2011-13 budget, he said.
Two major reductions in the budget proposals are to K-12 schools and Medicaid and human services provider rates.
But Heidemann is against adjusting the budget for one or two items, he said.
"If we can't adjust everything, we shouldn't adjust anything," he said.
He recommends waiting for the October economic forecast and if things continue to improve, considering changes then.
Appropriations Committee member Heath Mello said he would also wait until the interim to revisit budget decisions -- especially concerning education funding and provider rate cuts.
Heidemann said March and April receipts, particularly in individual income taxes, have been good. But forecasts for sales taxes in the next two years are down.
So he'll be cautious.
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