While Nebraska and its local economies are weathering the pandemic well relative to other states, we have taken a big economic hit and what the future holds for our economy and our revenue streams is very uncertain.
That was the theme put forth by a trio of panelists who participated in a recent OpenSky webinar on the national, state and local economic impact of the pandemic.
“We’re in a very deep recession at the moment and while all of the projections show an eventual recovery going forward, there’s a very real possibility that the recovery will take a long time,” said Dr. Matthew Fiedler, a fellow with the Brookings Institute, who discussed the impact of the pandemic on the national economy. “There’s a lot of disagreement about just how fast recovery will happen.”
What data do show is that the pandemic is likely to lead states to see shortfalls that are considerably larger than the federal aid they have received so far, Fiedler said. More federal aid is likely for states but major questions remain about how much aid is coming and how it can be used, Fiedler said. For example, he said, it remains to be seen if such aid can be used to help address revenue shortages state and local governments experienced because of the pandemic.
So far, Nebraska’s economy has proven more resilient than most, said Dr. Eric Thompson, director of the University of Nebraska Bureau of Business Research, in part because our state’s economy isn’t heavily dependent on industries that were most impacted by the pandemic, such as travel and tourism. Nebraska’s tax revenues could get back to FY 19-20 levels by FY 21-22 should there be no resurgence in COVID-19 cases, Thompson said. But if Nebraska sees a new surge in cases similar to those being experienced in Florida and Texas, our recovery could be slowed, he said.
While speaking about the pandemic’s impact on Lincoln’s economy, Brandon Kauffman, the city’s finance director, noted that Lincoln’s sales tax receipts haven’t been impacted as badly as originally projected, thanks in part to very conservative revenue forecasts and the collection of taxes on online sales, but that tax receipts still declined 14% in April. The future outlook for the city is hard to gauge, he said, particularly considering the pandemic’s impact on Nebraska football, a major economic engine for the city, and other key events. The pandemic’s disparate impact on various industries also contributes to the city’s fiscal uncertainty, Kauffman said, noting that some businesses — such as landscaping and garden sales — have done well during the pandemic while others — like retail clothing sales and hospitality services — have been severely negatively impacted.
In order to prepare an uncertain future that may include a fall with no Husker Football, Lincoln is continuing to be conservative with its revenue projections, Kauffman said.
The webinar was held to help Nebraska lawmakers and other state and local leaders get a clearer picture of the pandemic’s economic impact as the Legislature prepares to reconvene on July 20, said Renee Fry, OpenSky’s executive director.
“We certainly are in uncharted territory as this is no ordinary recession,” Fry said.
Video of the webinar can be accessed here and below you can download PDFs of:
Also, if you haven’t done so already, please register for our July 7 webinar regarding tax changes in the CARES Act with University of Nebraska Law Professor Adam Thimmesch and our July 23 webinar about revisions to the state’s revenue forecast with Appropriations Chair John Stinner and former Sen. John Kuehn, who is a member of the Nebraska Economic Forecasting Advisory Board.
