State senators could be back in Lincoln for a special session this fall if the economy continues to tank, according to Gov. Dave Heineman and legislative leaders.
NANCY HICKS / Lincoln Journal Star | Posted: Wednesday, June 3, 2009 12:00 am
State senators could be back in Lincoln for a special session this fall if the economy continues to tank, according to Gov. Dave Heineman and legislative leaders.
There are still many unknowns, said Appropriations Committee Chairman Lavon Heidemann.
If the April forecasting board prediction is too high, the senator from Elk Creek said, there could be a need for a special session.
"We are going to watch the receipts very, very closely," Heineman said.
If tax receipts come in as predicted by the state's forecasting board, he said, "that will be great news."
"But if we were to lose another $50 million to $100 million, we are going to have to have some serious discussions about what we do."
Nebraska is better off than many other states, the governor said, but that doesn't guarantee a problem-free future.
Income tax receipts will continue to be low for several years, he said.
CPAs have told the governor one reason for the dramatic 16 percent drop in income tax revenue below projections in April was that there were no capital gains.
And people will be carrying capital losses over into the next two tax years, Heineman said.
That means income tax receipts are likely to lag even if the economy begins to pick up, he said.
But it is difficult to determine what might happen in the general economy over the next few months - and thus to sales tax receipts.
Business owners across the state are generally optimistic, Heineman said.
"They see the cup as half full rather than half empty," he said. "Yes, there is a slowing of the economy, but they tell me they can weather the storm."
Farmers and businesses have used the past two or three good years to pay down debt, and they are stronger financially, he said.
However, even with a good attitude, there is "limited visibility" about what will be going on in July or November, Heineman said.
Nebraska is better off than most other states, he said, noting it was ranked No. 1 in financial happiness based on average non-mortgage debt, foreclosures and unemployment.
"This is a reflection on core values of this state," the governor said. "We don't spend money we don't have. We don't take out home mortgages that we can't afford to repay. And businesses didn't take out loans that they couldn't repay.
"That's why our economy is holding up and others aren't."
Reach Nancy Hicks at 473-7250 or nhicks@journalstar.com.