Friday’s the day everyone in the Legislature has been waiting for this year.
No, it’s not that big steak fry the senators all talk about. It’s the day the new tax revenue forecasts will be made by the Nebraska Economic Forecasting Advisory Board.
Feb. 24 — let’s call it “forecast-ageddon”!
The mostly obscure, nine-member board of business operators, bankers and economists meets two to three times a year to project how much sales, income and miscellaneous taxes (liquor taxes and such) the state can expect in the upcoming months.
It sets a benchmark on how much the state can spend. If forecasts are too low, it’s time to cut spending or raise taxes; if they’re too high, it’s time to plump up the cash reserves, give some back in the form of tax cuts or spend away on new programs or projects.
Recent forecasts have been on the gloomy side, leaving state legislators to cut spending and programs and hold off on tax cuts. But Gov. Heineman is among those thinking that better days are ahead and that the state has enough money now to afford a $130 million a year tax cut.
There are many doubters, and Friday’s forecast will shed some light, hopefully, on who’s right — those who think happy times are here again and the state can afford $95 million in new University of Nebraska construction projects, the governor’s tax cuts and a bunch of tax exemptions; or those who think we should hold tight and watch our purse strings.
A new group, the OpenSky Policy Institute, chimed in this week. It said that unless the new tax forecasts are amazingly good, the state ought to hold back on tax cuts. The state can’t afford them, the group said, and besides, states don’t cut taxes when they’re facing a budget gap in the future (projected at over $600 million in the next biennium).
Even conservative State Sen. Deb Fischer of Valentine, who is running for U.S. Senate, urged caution this week. She said she was flabbergasted at the number of spending proposals and tax exemptions pitched by her colleagues this year — which all cost money and take away revenue from current state priorities. She, too, said the state can’t afford it all.
Fischer, whose father used to be a state roads director, is concerned about one spending priority in particular: her bill last year that earmarks an additional $70 million-a-year in taxpayer money for new highways.
That’s a major chunk of change, but so would $130 million in tax cuts, or $19 million for the crippled child-welfare system, or $95 million for NU.
The Speaker of the Legislature, Sen. Mike Flood of Norfolk, has talked of lawmakers mixing together a “stew” of tax cuts, spending priorities and business incentives.
Friday, the projections of the Economic Forecasting board will launch the Legislature into high fiscal gear. The Appropriations Committee will start computing how much it can spend, the Revenue Committee will figure how many taxes can be cut, and Gov. Heineman will start working on what he can get out of the pot.
Friday will tell us if there’s meat on the economic recovery in Nebraska that we can all chew on, or more stew bones ahead.