TAX NEWS - June 2010

Nebraska government tax revenue rebounds in May

State tax revenues rebounded in May after a dismal April, a sign that Nebraska's economy may be recovering and that lawmakers may not have to meet in an emergency session to again cut the budget.

The report released Thursday by the state Department of Revenue said net tax revenue beat projections by more than 5 percent in May. In April, net tax revenue was nearly 15 percent below official projections that set the baseline for the budget, leading to speculation that lawmakers may have to gather before the start of their regular session, which begins in January, to trim the budget.

Gov. Dave Heineman said he didn't anticipate calling a special session, but if revenues dropped in coming months he would consider it.

"I'm pleased May receipts are up, but one month is not a trend," he said.

Total revenues so far this fiscal year, which ends June 30, are still $41 million, or 1.4 percent, below official projections.

In November, Heineman called lawmakers into a special session to close a $334 million budget gap, and they did so primarily using across-the-board cuts to state agencies.

During the regular legislative session that ended in April, lawmakers and Heineman reduced the current two-year budget by another $48 million, cutting agencies more.

More cutting is expected when lawmakers meet in January: Current estimates peg the budget deficit for the two-year budget that will begin in July 2011 at roughly $670 million.