November state revenues up, especially corporate income tax
Last month we talked about how the state’s revenues were exceeding forecasts. In the last 30 days there have been many discussions in Lincoln about what to do with this excess cash. Some want to put it into the Property Tax Credit Relief Fund, some want to use it for comprehensive property tax reform, some think it should go into the state’s rainy day fund for an unforeseen event, and some just want to spend it.
It is important to note from this report that the corporate income taxes are way above their forecast amount – consider it an outlier. This is because this tax source is unreliable and could very easily be below forecast in the upcoming months. Anytime you see something that is that far off from expectations we must agree that it is an outlier and not a reliable figure for long-term planning.
Another thing to point out is that all these tax revenues are above forecast, which means the state is unnecessarily taking money out of the private sector that would be otherwise growing Nebraska’s economy. Economists have proven that government spending does not stimulate private sector activity, so it is better to leave these dollars where they can create the most growth. This is support for tax reform and returning these dollars to the taxpayer.
On the flip side, many financial analysts are predicting a recession in the upcoming months/year. So, if the state is not going to enact tax reform and return these dollars to the private sector, then the money should be moved into the state’s rainy-day fund to hedge against a recession.
In short, Nebraska does not need to find ways to SPEND this revenue, instead, it needs to be returned to the citizens so it can be invested and grow, or it needs to be saved for a future economic downturn.
The November net receipts for the state were released today and were $432 million (6.6%) above the certified forecast.
|Sales Tax||5.8% below forecast|
|Personal Income Tax||4.3% above forecast|
|Corporate Income Tax||5,091.2% above forecast|
|Miscellaneous Taxes||1.0% above forecast|
For the fiscal year, which runs July 1, 2019 to July 30, 2020, the net General Fund receipts are $2.020 Billion, which is 6.7% above the certified forecast.
|Sales Tax||2.0% above forecast|
|Personal Income Tax||3.3% above forecast|
|Corporate Income Tax||90.4% above forecast|
|Miscellaneous Taxes||5.3% above forecast|
For the complete report on General Fund tax revenues, click here.