Gov. Ricketts Urges Fiscal Restraint as Tax Receipts Decline

Posted By: Veronica Ortega

Governor Pete Ricketts announced the state is facing an unexpected tax revenue shortfall. He says tax receipts have been below projected forecasts by $95 million. Which is about 2.2% lower for the fiscal year.

"This is not a crisis, but this is what we get paid to do is manage our budgets within the constraints of the revenues we project," Gov. Ricketts said.

Here are some of the things the governor is asking for, review vacant positions to see if additional hiring is absolutely necessary. Prioritize essential travel and consider alternatives such as video calls and web meetings in order to save money.

"Shortfalls and tax receipts sort of extenuate the importance of that, and require you to take special action," State Budget Administrator Gerry Oligmueller said.

The state gives each agency 25% of it’s budget money each quarter, but now it will be reduced by 1%. Ricketts says they’ll still get their full amount it’s just slowing down how the money is going out.

So what’s the caused the shortfall?

"We attribute much of this to what’s going on in the Ag economy," Tax Commissioner Tony Fulton said.

Fulton says commodity prices, which were at an all time high in 2013, have come down. Making it harder for farmers to earn a living and their families to spend less money, affecting tax receipts.

 Ricketts says he doesn’t think a special session of the legislature is necessary at this point, and he still hopes to cut taxes during the next two year budget period.

Posted By: Channel 8 Eyewitness News

LINCOLN – Today, Governor Pete Ricketts announced tax receipts had performed 2.2 percent below the certified forecast upon which the first year of the current biennial budget is based.  At a news conference, the Governor was joined by State Budget Administrator Gerry Oligmueller and Tax Commissioner Tony Fulton to discuss the state’s approach to managing the state budget in light of the $95 million gap between forecasted tax revenues and actual tax receipts received.

“During my administration, we have successfully constrained spending and cut the rate of growth in government from 6.5 percent to 3.6 percent.  Slowing the growth in government in this biennium was important to allowing us to effectively address this gap between projected revenues and actual receipts,” said Governor Ricketts.  “This news necessitates we take additional steps to further slow state spending and demonstrate fiscal restraint.” 

At the news conference, the State of Nebraska Tax Commissioner outlined some of the economic factors behind the gap between the forecasted and net receipts received.

“According to the Department of Revenue’s analysis, lower commodity prices and slow growth in tax receipts from ag producers, the state’s top industry, have been key contributors to this slowdown,” said Tax Commissioner Fulton.  “In the past few months tax receipts have been lagging, and June tax receipts continued along the same trajectory.”

At a special cabinet meeting this morning, the Governor outlined new budget guidance for cabinet-level agencies.  

“In the past, the State of Nebraska has successfully handled lagging tax receipts with proactive management and respect for our state’s hardworking taxpayers, and my administration will work to do the same,” said Governor Ricketts.  “I have directed my Budget Administrator to work closely with cabinet members as they manage their budgets to identify additional areas to cut and slow spending.  Additionally, I am providing every state agency with new budgetary guidance on how to take steps to constrain their spending.”

Written copies of the Governor’s guidance will be delivered to all code and non-code state agencies.  The Governor’s State Budget Administrator Gerry Oligmueller will work closely with code agencies to implement this guidance, and the Governor is also offering the assistance of his Budget Office to non-code agencies in implementing restraint.  The Governor’s outlined new budget restraint guidance covers the following areas:

  • Reduced Allotment: Reduce quarterly allotment of current legislative appropriations to state agencies, boards, and commissions by one percent to incentivize additional spending restraint and to prepare for possible budget reductions.
  • Hiring: Review all vacant positions and determine improvements in management or process to allow postponement or elimination of additional hiring.
  • Travel: Prioritize essential travel necessary for the safety and protection of our citizens.  Explore technological alternatives, such as video calls and web meetings, in lieu of traditional meetings necessitating travel.
  • Technology and Equipment: Coordinate software and hardware purchases with the Office of the Chief Information Officer to identify the greatest savings and shared use possible.  Limit equipment purchases to those necessary for process improvement or to maintain services.
  • Grants in Aid: Seek efficiency from your partner political subdivisions or other organizations in providing state services.

In addition to this guidance, the Governor urged agencies, boards, and commissions to examine how fees and assessments should be reduced to eliminate excess fund balances and spur economic activity.

“The State Budget Division stands ready to assist all state agencies with implementing this budget guidance,” said State Budget Administrator Oligmueller.  “The state of Nebraska has diligently worked to address similar slowdowns in the past.  Working together, we can effectively manage state agency budgets to address this slowdown in tax receipts just like hardworking Nebraskans who have to make tough decisions every day when managing their family or business budget.”