December state tax receipts above projections
The Nebraska Department of Revenue reported today that net state General Fund tax receipts for December 2019 were more than 12% above a previous forecast.
The state’s General Fund is supported by taxes including income taxes, the sales tax, and some excise taxes, like those on alcohol and cigarettes. The fund does not include property taxes, which are levied by local governments.
After refunds, the state brought in $473 million for the General Fund in December, while projections anticipated $421 million. The uptick of $52 million can be attributed to corporate income tax and sales tax receipts coming in significantly above forecast in December. Corporate income taxes were 50.5% above forecast, followed by sales taxes at 23.8% above forecast. Individual income taxes were slightly below forecast, while Miscellaneous taxes were nearly 11% below forecast.
For the 2019-2020 Fiscal Year, overall receipts are currently 7.7% above forecast, with corporate income taxes exceeding forecasts by 75%. Other tax sources are all closer to the forecast conducted last year.
The receipts shouldn’t be seen as too much of a surprise given the general state of the national economy and the significant federal tax cuts corporations have benefited from in recent years. When times are good, corporate tax receipts and other income taxes can experience a significant boost. However, they can also contract significantly when the economy isn’t doing as well.
The current numbers mean the state will have an easier time approving some immediate spending measures this legislative session, along with tax changes like the recently approved 50% exemption for military retirement incomes. However, some caution is in order. As senators make more long-term commitments with these tax dollars, including a multi-year property tax plan among many others, it won’t be long before all of these receipts are spoken for.