Tax revenue poured into state coffers last month, up 17% over expectations.
State Tax Commissioner Doug Ewald reports gross General Fund receipts for December totaled $423 million, well over the forecast of $362 million. Gross individual income tax receipts came in 24.5% above the forecast.
“There was probably a lot of capital gains selling late in the year with the uncertainty associated with what was going to happen with capital gains rates at the federal level that probably drove some people to trigger some capital gains to lock in maybe some lower rates,” Ewald tells Nebraska Radio Network.
Net tax receipts for December totaled $363 million, nearly 13% higher than the forecast of $322 million. Net individual income tax receipts came in 17.3% above the forecast while net corporate income tax receipts came in 51% higher than expected. Net sales and use tax receipts dropped half a percent below the forecast with net miscellaneous receipts, a small category, falling nearly 10% below the forecast. [PDF of tax receipt Dec. numbers]
Ewald cautions against making too much of the strong December numbers.
“It does concern me a little bit from the standpoint that if you see a onetime spike that that is not a recurring item that we can continue to bank on year in, year out,” Ewald says.
Ewald says the corporate income tax receipts might reflect a growing economy, yet uncertainty about the future. He says it appears businesses still hesitate to hire more employees and, instead, funnel extra earnings to the bottom line.
“That’s a good sign, but how much of that was driven by capital gains selling and a number of other things that was going on at the federal level is unclear and, obviously, we’re not ready to take this trend to the bank quite yet.”
Net General Fund receipts for the fiscal year now total $1.86 billion, 4.5% above the certified forecast of $1.78 billion. Net individual income tax receipts have come in 6.3% above forecast with net corporate income tax receipts nearly 30% above projections.
The Nebraska Economic Forecasting Advisory Board meets at the end of next month, but Ewald says the board likely will want to see additional numbers before it determines a definitive trend. The board could wait until its April meeting before giving the legislature a projection upon which to build the next two-year state budget.