LINCOLN — Gov. Pete Ricketts praised lawmakers this year for passing a balanced state budget and sustaining his budget vetoes.
But in an end-of-session interview he warned that those steps may not be enough to avoid a special budget-cutting session later in the year.
“The Legislature has reduced the risk of us having to come back before next January, but it has not eliminated it,” the governor said.
Ricketts said he will be keeping a close eye on state tax revenues over the coming months to see how they compare with the revenue forecasts used in building the budget.
“I don’t think anyone wants to come back in a special session, but we’ll take the appropriate steps if necessary,” he said.
The governor also said he plans to keep working on building support for a tax cut package in the coming months.
He backed Legislative Bill 461, a package of income tax and agricultural land property tax changes, during the session that just ended. The package stalled during first-round debate after some critics said it did too little to ease property taxes and others said it could jeopardize education and other critical state services.
Ricketts said the level of property taxes, especially the taxes on farm- and ranchland, is the top concern he hears from Nebraskans.
At the same time, business groups have said cutting the top income tax is vital to making the state competitive economically.
But he said there are not enough rural senators to get an ag land tax bill passed, just as there are not enough urban senators pushing to cut income taxes.
The package represented an attempt to bring the two groups together to get the bill passed.
“We’ll work with those senators on ‘How do we overcome those objections? What changes can we make to this bill?’ ... so we can get those 33 votes next year,” Ricketts said.
Getting tax cuts passed could be more difficult if Nebraska’s revenue picture gets darker, however.
The state’s official forecasting board lowered predictions of state tax revenue during its February meeting and again in April.
And some state senators said the predictions are still too rosy, especially when looking at the struggling agricultural sector.
A committee comprising legislative leaders and the state tax commissioner will meet to review the state’s economic situation after the June 30 end of the fiscal year.
The committee could recommend a special session then, or the governor could call one later based on the trends in monthly tax collections or on the results of the October meeting of the forecasting board.
Ricketts decided against calling a special session last fall, despite sagging tax revenues. He said officials believed the problem could be managed until lawmakers convened in January.
Holding off on budget changes also avoided the cost of a special session and meant the senators making budget decisions would not be lame ducks, he said.
Lawmakers passed midyear budget changes early in the 2017 session before tackling the regular budget for the two years ending June 30, 2019.