Nebraska posting strong revenues in nationwide study of pandemic impact
Nebraska has posted strong state tax revenues during the pandemic, yet many in Washington D.C. keep calling for more state aid. Is Nebraska an outlier or are other states doing as well as the Cornhusker State?
According to data collected and published by the Reason Foundation, the revenue shortfalls for state and local governments are not as bleak as many estimated. This is valuable information for lawmakers to have in Lincoln as they craft the state’s biennial budget and members of Congress debate yet another relief package to state and local governments.
“Our review of state revenue reports and Census state revenue surveys suggests a nationwide decline of about 1 percent between 2019 and 2020. But there is a large range of outcomes, with some states, including Alaska and Hawaii seeing double-digit decreases that were predicted. Meanwhile, states like Idaho, Colorado, South Dakota and Utah experienced the largest revenue increases.”
The review compares the 2019 calendar year to 2020. The author notes that every state does not report the data the same way and monthly state revenue reports do not include all the taxes and fees state government collects. So, while this is a very good indicator of the current situation, it is not 100% accurate due to reporting differences.
According to this analysis, Nebraska is the 9th best performing state in the nation, with a revenue growth of 3.16% comparing the two years. The national average is -0.65%.
But what is a bigger takeaway from this other than the federal government doesn’t need to send states any more money?
Nebraska lawmakers frequently compare its tax structure and business environment to other states. It’s no secret we need to modernize our tax code. The pandemic has shown us that a broad sales tax base is stable during times like this, and also relying too much on one type of tax, like severance taxes from oil in natural resource rich states, or corporate income, is not reliable.
Nebraska has been a fiscally responsible state and now is the time to reform our tax code to help our state recover and also attract people from other states that want more stability.