Nebraska advisory board approves $6.97 billion revenue forecast, flags one-time tax spikes as key uncertainty

The Nebraska Economic Forecasting Advisory Board on Feb. 27 adopted a $6,970,000,000 general revenue forecast for fiscal year 2025–26 and set a $6,625,000,000 forecast for 2026–27 after presentations from state revenue forecasters who warned that large, irregular sales and use tax payments and the timing of incentive refunds continue to complicate near-term projections.

The board voted on component estimates and approved the totals by roll call. Chair (S1) called for motions and the board carried the measures to set sales and use tax, individual income tax, corporate income tax and miscellaneous tax lines that combine to form the totals.

Why it matters: forecasters told the board that a few very large, nonrecurring or timing-sensitive payments — likely tied to big projects and incentive-driven refunds — are inflating receipts in the current year and will likely lead to refunds in subsequent years, producing a ‘‘timing’’ pattern that can both boost and then depress revenue across fiscal years. Those dynamics affect the state’s short-term budget outlook and the reliability of year-to-year comparisons.

Wafu (presenter S2) summarized the department’s revision process and model assumptions, saying the state’s growth path remains generally in line with national trends but that a handful of large use-tax payments have driven much of the forecast variance. "For the month to date, we're down about 17,000,000 gross and 9,600,000 net," he said, and cautioned that faster refund processing this year made timing effects more visible.

Forecasters described how incentive programs and pass-through entity tax (PTET) mechanics interact with receipts. The presenters told the board they build a baseline refund assumption (about $100 million) and add layered refund estimates into the next fiscal year to smooth spikes. On PTET specifically, presenters said they expect roughly $350 million to show up under current assumptions and attributed most of that amount to corporate-side effects: "350,000,000 will come in at PTET with increased corporate receipts," one presenter said.

Board members pressed forecasters about the size and persistence of these effects. Several members said local evidence — spikes in municipal sales/use receipts in at least three cities and media reports suggesting a data-center build-out — supports the presenters’ view that multiple large projects, not a single payer, are responsible for the unusual payments. One board member asked whether those payments were simply an "artificial inflation" of revenue that would be refunded later; the presenters agreed that refunds and incentive audits drive much of the timing effect.

Members also discussed local shocks: forecasters and board members incorporated estimates of the economic impact from the recent Tyson plant closing in Lexington (citing a University of Nebraska–Lincoln estimate) into the revised forecast. Forecasters said the UNL figure — about $20 million in lost income-tax receipts and about $10 million in lost sales-tax receipts annually, as presented during the meeting — was included in their baseline adjustments.

After review and discussion, the board approved the FY2025–26 package, adopting the $6.97 billion total and the component lines by roll call. The board then proceeded to set FY2026–27 component estimates and adopted a $6.625 billion total for that year as well.

Board members emphasized uncertainty and the need to revisit assumptions: several said they expect to refine forecasts again in October as more data arrive and as the near-term effects of incentive refunds and PTET stabilize. The board set its next meeting for Oct. 30 at 2 p.m.

The meeting record shows no public comments were offered at the end of the session and the board adjourned following the adopted votes.

Sources: presentation and roll-call votes during the Feb. 27, 2026 Nebraska Economic Forecasting Advisory Board meeting (statements attributed to presenters and board members as recorded in the official transcript).