July 23, 2014

State tax revenue: what March giveth, April taketh away

What March gave, April took away.

State revenue surged in March only to plummet in April, according to numbers released by the Nebraska Department of Revenue.

The department reports net tax collections last month fell 7.2% below the prediction of the Nebraska Economic Forecasting Advisory Board.

Net tax receipts in April totaled $483 million, well below the projected $520 million.

The fall off can be attributed to a drop in state income tax receipts, both individual and corporate, as well as a drop in sales tax receipts.

The two month swing is mostly a wash. State revenue in March jumped $37.5 million ahead. In April, it fell back $37.7 million.

State tax revenue as a whole still is ahead of the forecast, about $3 million better than forecast.

 

Income tax filing deadline is today

Today is the tax filing deadline. Everyone has until midnight to complete and either e-file or mail their tax returns to the Internal Revenue Service. IRS spokesman Christopher Miller says so far about 90% of all Nebraskans have used e-file. He says at this late date that may be the best option. He says the biggest problem at this late date is people entering the wrong figures. He says e-filing reduces the chance of error to around 1% compared to a 20% chance with a paper return. He recommends everyone check their returns twice to make sure all the figures are correct including social security numbers of all dependents.

Miller says those who won’t finish their returns by the deadline can file an extension – IRS form 4826. That extends the filing deadline six months until October 15th. About 45,000 Nebraskans are expected to file extensions this year.

Filing an extension does not mean extra time to pay money owed. Miller says all payments are still due today and penalties and interest will be added to tax bills. He says those who can’t pay their tax bill should contact the IRS and they will work out a payment plan. Miller says an offer of compromise that can be set up in some situations.

April 14th is Nebraska’s Tax Freedom Day

April 14th is Tax Freedom Day in Nebraska. Every year the Tax Federation crunches numbers from each state to determine when residents have earned enough money to pay off their total tax bill for the year.

According to the Tax Foundation, Nebraska’s personal income tax system consists of four brackets and a top rate of 6.86%. That rate ranks 15th highest among states levying an individual income tax. In 2012 Nebraska’s state and local income tax collections per person was $832 which ranked 23rd highest nationally. In 2013 Nebraska’s Tax Freedom Day was April 12th.

Tax cut bills signed into law add up to $400M+ (AUDIO)

Gov. Dave Heineman has signed into law tax cuts which could total more than $400 million and the chairman of the legislature’s Revenue Committee says the tax breaks will mean more in the years to come.

LB 987 will index the state individual income tax system to inflation, preventing bracket creep as costs rise.

“This is very, very important tax relief and let me just say for Nebraskans in particular the fact that we are now indexing individual income tax brackets is very, very important,” Heineman said during a bill signing ceremony in his Capitol office.

The bill also exempts up to $58,000 in Social Security income for couples. It gives military retirees an option to reduce the state income tax on their pensions.

Revenue Committee chairman, Sen. Galen Hadley of Kearney, says that while indexing the state income tax to inflation might seem minor, its impact could be major over the years.

“I think it is one of those tax cuts that starts small and eventually becomes a very significant amount,” Hadley tells Nebraska Radio Network.

Hadley notes the move is estimated to save Nebraska taxpayers as much as $100 million over the next 10 years. Hadley says that while many have complained that the legislature didn’t rally around a big tax cut package, they will be surprised by that impact of the cuts that did pass.

Other tax measures signed into law:

LB 96 exempts replacement parts for farm machinery from the state sales tax.

LB 905 increases the $115 million Property Tax Credit Program by $25 million a year.

LB 986 expands the homestead exemption program.

LB 1087 gives the homestead exemption to honorably discharged veterans.

AUDIO:  Brent Martin reports [:50]

Gov. Heineman spikes $65M in spending, urges property tax relief (AUDIO)

Gov. Dave Heineman takes questions during news conference on budget vetoes

Gov. Dave Heineman takes questions during news conference on budget vetoes

Gov. Dave Heineman vetoes $65 million from the $8 billion mid-term state budget, saying the savings should go toward property tax relief.

Of the $65 million vetoed by the governor, $26 million is General Fund spending.

Heineman said his action gives legislators $25 million to add to the property tax credit fund.

“And practically every single one of them ran for legislature saying I’ll do something about property tax relief and they’re going to have an opportunity in the next ten days,” Heineman told reporters during a rare late Saturday afternoon news conference.

The legislature’s Budget Committee added $25 million to the $115 million Property Tax Credit Fund. During legislative floor debate on changes to the $8 billion state budget, an amendment to add another $20 million received 20 votes, five short of the total needed to pass.

Heineman suggested legislators try to increase the property tax relief fund again.

“At that time I think some we’re trying to argue well, there isn’t sufficient funding,” Heineman stated. “Well, I’ve given them the sufficient funding to do it. It ought to be a 49-0 vote.”

The Tax Modernization Committee which met over the interim and held a number of public hearings reported that property taxes topped the list of concerns expressed by Nebraska citizens.

Before any consideration is given to adding money for property tax relief, the legislature will consider whether to override the governor’s vetoes.

Among the vetoes were $11.7 million to upgrade the Capitol heating, ventilation, and air condition system; $10 million for the Behavioral Health Air program; $7.4 million for a Juvenile Services Project Contingency Program; $5.4 million for increased provider rates in Developmental Disability Aid program; and $2.5 million to build the four courtyard fountains at the state Capitol that were planned, but not financed when the Capitol was built during the Great Depression.

AUDIO:  Brent Martin reports [:50]

AUDIO:  Gov. Dave Heineman announces vetoes to the $8 billion state budget. [7 min.]