LINCOLN, Neb. (AP) - A struggling farm economy could mean more budget challenges for Nebraska lawmakers this year, officials said Monday as they lowered state revenue estimates for the next two-year budget.
Members of the Nebraska Economic Forecasting Advisory Board offered a gloomy outlook for agriculture over the next few years as they set fresh projections.
Board members said Omaha and Lincoln’s economies are faring well, but low commodity prices continue to hurt agriculture, the state’s largest industry. Board member David Ochsner said farmers have responded by cutting their spending, and he’s concerned the trend may continue.
“We may be in for a long haul,” said Ochsner, a banker based in Nelson.
The board’s projections will leave lawmakers with a projected $288 million revenue shortfall in the upcoming two-year budget, which will cover state expenses from July 2017 through June 2019.
Lawmakers on the budget-writing Appropriations Committee have developed a plan to reduce their original $895 million shortfall to roughly $134 million. Because of the forecasting board’s new estimates, however, that projected shortfall will now grow to $298 million.
In a statement, Gov. Pete Ricketts said the forecast “underscores the need for continued fiscal restraint from every single state-funded entity.” Ricketts has proposed a plan to cut the state’s top income tax rate.
“We must tighten our belts and balance the budget without raising taxes,” he said.
Critics of the plan said lawmakers should look seriously at raising new revenue, possibly by freezing or reversing many of the tax exemptions lawmakers have approved over the past decade.
“We’re going to do a lot of damage to our state is we close the shortfall with budget cuts alone,” said Renee Fry, executive director of the OpenSky Policy Institute.
Fry pointed to a recent U.S. Government Accountability Office report that said many states may be entering a long run of budget shortfalls as health care and pension costs increase and the population ages.
The group Rebuild Nebraska, a coalition that includes advocates for low-income residents and the state teacher’s union, called on lawmakers to protect existing investments in schools, health care and correctional services.
“Enacting income tax cuts - which are disguised as middle-class tax relief but really benefit the wealthiest Nebraskans - will only add to the state’s budget challenges,” the group said in a statement.
Commodity prices are likely to stabilize over the next few years but probably won’t increase to previous record highs anytime soon, said Hoa Phu Tran, a Nebraska Department of Revenue economist.
Board member Steven Seline, a financial executive from Omaha, said his city is faring well and noted that companies such as food processors will probably benefit from cheap commodities.
Still, he said, “I’m worried about the farm economy.”
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