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OPINION: Good news

OPINION: Good news

Business ranking, surge in taxes has governor calling for cuts

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The business television network CNBC ranks Nebraska as the No. 4 state for business, a ranking that state leaders will surely be bragging about.

The ranking was up two spots from last year. CNBC credited tax reform spearheaded by Gov. Dave Heineman for the state’s success.

“A big part of the Nebraska points total comes courtesy of Business Friendliness, a category in which it ranks third overall. Nebraska finished fourth in Economy and Best Quality of Life also,” the network said.

“If Nebraska wants to keep a spot in the Top 5 in years to come, it will need to improve in categories where it continues to score poorly, including Access to Capital and Technology and Innovation. Venture capital dollars have had a hard time flowing to the Midwest as of late.”

It was just more good news for the state. The Federal Reserve Bank of Kansas City reported recently that Nebraska’s economy expanded modestly in the first quarter of 2013 despite economic headwinds from government spending cuts. Nebraska’s unemployment rate, which fell to 3.7 percent in April, remained the second-lowest in the nation.

Manufacturing, especially in exports of processed food products, jumped as Japan relaxed trade restrictions on U.S. beef. Japan now ranks as Nebraska’s second largest foreign market for manufactured goods.

The state’s real estate market gained momentum during the first quarter. Construction jobs increased by more than 2 percent from last year, and the number of single-family building permits grew more than 40 percent for the second straight quarter.

Private service-sector firms also expanded jobs during the quarter, with the health care industry adding the most positions, followed by wholesalers and retailers. Federal government furloughs caused by so-called sequestration kept the jobs growth muted.

“After starting the year solidly, the outlook for Nebraska’s agricultural economy appears set to soften later in 2013. High production costs, coupled with a drop in crop prices, diminished farm income expectations for this fall’s harvest. However, the weaker income prospects did not entirely halt the rise in farmland values, though value gains slowed compared with the past two years,” the bank said.

And forecasters reported this week that state government ended its fiscal year with a record amount of revenue in the bank. Because tax collections exceeded forecasts, Nebraska’s cash reserve fund will grow to about $679 million, the largest total ever.

The State Department of Revenue reported $4.052 billion in net taxes for the year that ended June 30, some $52 million more than the state’s official revenue forecasting board had predicted just two months ago. The total is 7.6 percent higher than the certified forecast, which was issued on July 16 last year. State law requires that any money received in excess of the certified forecast must go into the state’s cash reserve. The certified forecast was $3.767 billion, meaning that $285 million will be added to the reserve fund.

Net individual income taxes for the year were 12.9 percent higher than the certified forecast, while net corporate income taxes were 19.8 percent higher. Sales and use tax receipts were $4.9 million lower than forecast.

The improvement had the governor calling for more tax cuts, even before a new tax study takes place to update the snarl of sales tax loopholes in present tax law.

“With the largest cash reserve that the state has ever had and a consistently improving economy, it is time to provide the citizens of Nebraska tax relief,” the governor said. “Tax relief should be the top priority of the next legislative session.”

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