Nebraska Economic Forecasting Advisory Board - Room 1524

Counting it down. Okay, I'm going to call to order today's meeting and ask emily to do a roll call of the board members present. Mr. Mcguinness here. Mr. Von here. Mr. Briese here. Mr. Clerk here, miss linehan here. Mr. Wickwire here. Mr. Miltenberger here. Mr. Saleen here. Mr. Wilson here. We have a full house and we have a quorum. In accordance with section 84, 1412 of the Nebraska revised statutes. Current copy of the open meetings act is available for you and is located in to my right in the back of the screen, on against the wall. If anyone here has an interest in reading it, and we have a copy of the minutes that have been shared with the board of february 27th, 2026. I think four of you present today did not attend the last meeting, so. But we have five that did. So let's see if we have a motion. And second, and get that approved. I'll move. Second. We have a motion and second. Any comments? Hearing none. Roll call. Mr. Von yes. Mr. Briese not voting. Mr. Karp yes. Miss linehan. Not voting. Mr. Mcguinness. Yes. Mr. Yes. Mr. Miltenberger. Yes. Mr. Celine. Yes. Mr. Wilson no. Voting. Five in favor for not voting minutes are approved. First of all, we'd like to welcome our three new members to the Nebraska economic forecasting advisory board. That includes tom briese, tim wilson, and luann lindemann. Both of them, in their own ways, are extremely competent and qualified to join the board, and we look forward to them using their expertise to help the board create a forecast. I don't know if any of you would like to say anything, but if you would, this is. Okay. Welcome again. Today we're having nominations and election for the chair and vice chair. So what I would like to do is to open the. We'll do the chair first, open up nominations for the chair. I nominate rich mcinnis for chair second. Okay. Are there any other nominations for chair? Hearing none, I'll close the nominations and ask for a roll call. Not a roll call. I'm sorry. We have a slip of paper in front of you. Since it's just one person that's here, I guess would be yes or no. I make a motion. We move by acclamation because there's only one person. Save a little time. Thank you. Is there a second to that? Second. Second. Any discussion? Okay. All those in favor, say aye. Aye. Opposed? Nay. Eyes carried. Thank you. Now, we'll do the same for vice chair. I'll open up the nominations for vice chair. I'd like to nominate zach karp second. We have. A nomination in a second. Are there any other nominations? Hearing none is. Would you like to do this by acclamation also? I'd make that motion. Is there a second? Second. Second to that. Okay. All those in favor, say I. I opposed eyes carried.

On the other hand, expect unemployment rate to rise a little bit two 4.6% into 2027. That's when they start to come back down. And through some of this discussion, you can see that reflect the forecast that we put together. A given that s&p tend to have a higher general fund revenue compared to s&p compared to moody, at least for our scenario. Inflation is a hot topic right now. It's remained elevated, and both of the services are not expecting inflation to reach 2%, which is the fed target until 2029. And as a result, they both believe that the fed will raise rates again in december and keep it there for most of 27 before they stop easing. But that's depending on inflation, reading inflation reading for first part of 2027. That is something that I see some information about. Nebraska economy. This graph shows the Nebraska employment came from. Moody. September 2026. Baseline forecast. You can see in 2026. At the beginning, you have a decline both in the labor force and the number of employees. At the same time, the unemployment rate went down. Right? So why is that went down at the same time. Some of this can be related policy, some of it can be. And then the unemployment rate doesn't move because both the employee and then the labor force both decline, right? So when you take that ratio, the number, the positive rate doesn't change. So but both services expect employment to pick up from now on. Nde have a slower rate compared to the period right when we are coming out of the pandemic. But. But Nebraska unemployment is much better than compared to national. On average, our unemployment rate is expected to only go up to 3.2% from the current 2.8, which is a whole percentage lower than the national average. Put together this graph for manufacturing, this is the average hourly earning. We can see it's increased in 2026 by 4.7%. I think part of the wage increase here this is nominal increase. Okay. So when you have high inflation the wage tend to go with it. And then it's expected to decline back to 2.9, 1.8 and 2% in the next three years, with the expectation that inflation will at least go in the right direction down. Therefore, the wage nominal wage doesn't need to increase at 4.7%. And this have direct impact on the wage don't increase fast enough. That's a function of. Of retail sales. We grew 5%, expected to grow 5% in 27 and then back to 3.5 in 2029. Keep in mind that this graph retail sale is everything like good and services both basically final sales to the consumer, not just the good. So if we break that down and the important of that is, is related, correlate pretty much related correlate to sales tax collection, right? So if you break that down, the total consumption expenditure is top line.

So the tax provision between when we enter the pandemic. And then we got out over that five year, we have the federal spending money, we got the property tax came into the system at refundable income tax credit that came out. Then we have the community that come in and then the community colfax can't raise tax, so we refund all of that. So and then the tax come in. So that's a lot of provision in there that we cannot at least I cannot break down what costs what. So we can't isolate the impact of mr. Clerk provision in our refund projection. So what I end up doing is I stopped the data back in. You know, I used the data up until wess clay. Right. So and then I do a projection out and then adjust for it by outside of the model. So we don't build it into the model. Because when you have a time series, we expect a nice smooth time series. But given all those, it's not a really nice smooth time series. We can't do a projection on that. So we stop the data and then we. We make adjustment outside the model to account for what we think are happening with the ptc, you know, with all that stuff. Well, and then we missed. All right. So that's the story why we missed. So for this particular forecast, what we did is we given that we have about two years of tech coming in into the refund, the ptc already out for a couple of years now. So the data seem to be a lot smoother now. At least we can see where the weather up and down and account for them. So we use the data all the way up to september of this year to come up with this forecast. And it's reflected by increasing the refund throughout the forecast period. Okay. So we missed because of refund. There you and that particular reason. Were there any states in the country that got it right in terms of refunds? And if so, what did they do differently? They do not have. To go all the way back. Back to actively. That's a different, very much different. So but but most of that came in in 24. Right? Right. But it came in. And then the reason the tech messed up on our data is the data itself, not not the timing, right? Because when you have. Meyer all the way up to refund you, it. So when you have a refund, go up by 1.6 and then you stay at 1.6. So we thought our refund we out right then. So we basically start to assume about 350 million per year. And last year it came in about 500 some million. So we were expecting refund to go all the way back down to about 700 million or 800 million.

But it should be stabilized. And you can see on the table on page I f, which is what I. You can see the number of total receipts from 1.4 billion the first year, and then 782 and then 554 for tax year 26, you only we only see about 195 at the time of this writing in december. There will be more coming out coming in, right. Pay tax I, I. Yes, yes, yes. The issue with that, you just can't predict the behavior of people in businesses and corporations that are not just. Not just to behave. It's, it's the, it's the split out between tax category, right? It just doesn't involve in one thing. It can either lower your estimate payment, it can increase your final payment, lower estimate payment, lower final payment or higher refund. Right. So so it's all in three different parts. And then you throw in the net on the corporate tax side that all the s corporation money coming in into s corp into corporation and coming out. But to some extent we should be okay given the data that we are seeing is trending downward. Right. So the obvious question is what's your confidence level that that trend. Panned out. Pretty confident. Okay. And then last time. We're not holding the bar high then. Was any of the discrepancy or not discrepancy, but the, the miss that we over withheld from people's paychecks and they ended up getting. We did we, we did do, we did do an analysis on the withholding side. What I found is most withholding line up perfectly because I look at the withholding versus tax liability ratio of about two. It's pretty consistent from 2425. So the issue of withholding is not obvious. Because we do adjusted withholding table every year to account for the cut in the rate. But that also plays some factor because when you cut the withholding and then a different bracket, different people feel differently. So there would be some up and some down. It never going to be perfect. But we we did account for that. But and then when I look at the overall ratio of withholding versus tax liability, it didn't change a whole lot. Based on what you learned from this. If and it'll never be exactly the same. But if you had another round come up in three years, would you? And dave, this is a question for you to feel more comfortable in projecting it, knowing what you know today, or is it still kind of it's an educated guess. We don't change much now, you know, as long as we have a good baseline to it. So have we. Did both your areas learn enough to be more accurate? If in fact we have a next round when something like this or it's just impossible to predict with 100. I would say every.

So why is the drop in 2829? In that year? We if you look at the table on page with more detail in table 2 or 3. I'm sorry, what page? On page 11. So on page 11, under the refund section, you can see the sale and use tax there. The actual for 2526 came in at 84 million for 2627, the fiscal year last. In the last forecast I have 250 million. We dropped that to 172 million, given what we know now. Right. So that pushed us the forecast in 2627. But then in 2728 you will see 255 million going out in terms of the sales tax refund. That is a high. Both of that number, we are fairly the 172 million. We are basically 80% confident that we will hit the 255 million item, about 60% confident that we did right. And then the next three years, what I did the next three years, I was just not in the stock. We have a pot of money that I know it's going to be refunded out right now. Right. But the timing is very uncertain. So what I did is I took the remaining and I split up the three years I divided by three and stuck it in there because I don't know when it will go out right until the time gets closer. That is one reason why fy 2728 is less money than 2627. What was that gross amount that you split into? Three we are looking at. Tax 100,000,005 500,000,500. Split into three. So if you add all that up, it's $1 billion, right? Without a lot of heavy incentive, heavy amount. We like to think it's the baseline is 100 million elba. Right. So five years I took care of 5 million. The first two years we know pretty good. So we add in two anne 150 plus another 75. So about 180 million on the three year. So anything over 100 million, that's basically the account for that. Those incentive. Refund. Okay. So. Hang with me for a second on the individual income tax. The withholding is going to be split on january 1st. The withholding will go down, will go down to relate to the that's built into your forecast. Okay. So I just want to make sure that the building and then on the on the refunds, they show they're they're showing up here in already in there. And I know you've told us already, why is the miscellaneous go down in the, in the out years. Right now? So this ndis go down here. So in 25, 26 you get 519 million. A good chunk of that is transferred. So if you look at the table, that's the table for. Table four, page 13. If you look at the bottom line on transfer in, you will see 2627 is roughly 235 million in transfer coming in and 2728, you will see 52 million.

We change the withholding table. Refund should expect to go lower a little bit. And then it's bottomed out in 2017. Eight given the lower tax rate. Withholding kind of stable. Basically it's going down since the 2324 just because we adjusted the table then it should go back up. After the tax rate bottomed out in 27. Final payment it is flat around 600 and million. So same thing with estimate payment. So this is before the era of 504, 487 500 million. Then the pat area just dropped. And then we expect some increase in estimate payment as the salt deduction increase from 10,000 to 40,000. So that should drop away some of the amount. That corporate income tax we expect, you know the peter to stabilize. And so the corporate net income tax receipt. Just went through that. So for net revenue which is on the. And that's all I have. Yeah. Dave you're on. Fiscal forecast. Seven forecast for next. Dave, could you slide over closer to the microphone? It'd be easier to hear you. I'm sorry. Thank you. That might not be easier anyway. Okay. The first we have some selected economic factors influencing our forecasts from s&p global and moody's analytics. S&p has a slightly higher somewhat higher growth for predicted for gdp 2.6% for 2007, while moody's has it going down for to 1.9 for 27. Consumer spending is similar, similar to the gdp growth for both business fixed investment is sort of interesting and we get to that later. But 7.9% for 26 and 6.7 for 27, according to. S&p and and 9% and 6.7% for 26 and 27, according to moody's. Did take a look at fixed investment on information processing equipment. That's generally servers and other things that go into data centers. They've got 36% growth in 27 for s&p and almost identical for moody's. In fact, identical moody's monetary policy is the same. They both expecting a rate increase in december. Moody's expects the easing to start a little bit quicker. And and september of 27 rather than december of 27. Inflation. Is somewhat similar. Going out a little bit further. Moody's tended to be a little bit higher on inflation. Price of oil is similar for this year, but s&p has a brant crude at $88 a barrel for 27 and $75 a barrel for moody's and the stock market are both expecting about 11.4% increase and then a contraction in 27 3%, according to s&p, and 3.9 moody's. The performance of the current year. First quarter compared to certified. Right now, we're ahead of forecast for the first three months of the year, first quarter by fiscal year by 8.5%, or 8.5 million, which is about half a percent. And as we showed before, that's income tax. Corporate and individual pretty much offset the increase in sales tax. And miscellaneous is somewhat higher. But current receipts we looked at. Yes, the.

We have to build our way up to the gross. Right. So we know our refund is low. Right. So which one do you prefer missing? Do we prefer missing refund or we prefer missing the gross because it's a mathematical equation, right. You take the net plus the refund equal to gross. You can only change two. We can't change the net. We can only change the refund or the gross. So they all intertwine, right? So you can't. So. So so the projection to answer your question that the projection for individuals of that were inflated. So her question goes to, I mean, I think if I'm if I'm seeing it right, her question is, did we have a bunch of income go away in october that we would normally do without regard to refunds? Let's let's assume that the refunds were wherever they were. And you're what you're saying to me is it's all a mathematical formula. And that when we set the when we divide it up to 12 months on your on our original forecast, we divide it up in such a way as to make october look the way it looks. Yes. If we have. To go from the neck. Right. So let's say that let's say let's look at the whole fiscal year. At the same time. Let's just say we projected 5 billion in net receipts, right? We revenue and fiscal office do it all the way back up to get to the lowest amount. So basically the forecast is we work from the gross refund and we provide net so that we can forecast and. And so in effect, we only forecast two numbers right. The gross and and the refund. The net is coming out by itself. When we take on that number we do the reverse. Right. Okay. We can't change net. So we have to estimate the refund. Right. And then we take that and add that basically give us the gross, which is the 153 million that you see right there. Okay, so I know we're getting real technical now and I apologize for that. But when you guys do the 12 months, you don't, you do, you work it off. While historically this is the percent of income that's coming in these 12 months. So the so let's take the question is. 153 the is that the. Is that close to the number that we. The percentage that we would we would have expected in october. Yes, but the fiscal year is inflated by itself. So the number is. The number. The forecast forecast error on the on the net is going to influence the forecast error. Gross. Okay. I guess I guess what I'm objecting to, I think we're where we're going on this one is that if it is, it does make a difference to us given. I mean, we can see one reason why the refunds are where they're at.

I mean, I don't just going back a decade or whatever, I'm looking at these monthly. I don't think it seems it's not that far off of 40 month to month basis. We were off for the entire quarter. I think that's a problem. If there's just one month that doesn't. Yeah, I just and that's that's exactly my question is, is this something that's normally happening? And if so, why didn't we predict it in the when we did the projections? And here's another thing, right? So I mean, people know this. This is. So withholding basically do on october 31st, right? If you have some accounting for that particular company, you go on vacation a day early or a week earlier, they might make that payment ahead of time. We don't know that. Right. So it's the last day of the month and the first day of the month. Some of the money can go either way. So don't get too fixated on one month, especially in october. It's not a big month in colon. So let's say next month, if the money doesn't show up by the third or the fourth, then we. Have a $7 million in individual income tax that we expect today. You know, it might be five, it might be ten. It just depends on what got sent in early. So there's no you know, that's just a little there's nothing to do. There's nothing else to do in income tax until the first. But sometimes some of it comes in and. And it depends on. In this case, if it's due on a saturday, it's the it's due on a saturday, the friday and monday a little bit different than they are if it's due on sunday. Understanding all that calendars are very predictable. I think we knew a long time ago that this was going to be october 30th. The question I have is why? Why did we predict 153 and throw it off by a third? Basically on the projection, you explained it in kind of. Yes, it's it's how you do your formula is how I'm. Am I right in saying that? Okay. Yes. Yes. Well, going off by a third on what the projections are makes me nervous as to what happened. Now I think I understand, but I'm not sure. That some of it. Next month. When you say it's a month to date is are you pro rata showing us the projection on the left column? In other words, is this 30 out of 31 days? Yes. So it's not it doesn't help that either because you're going to get the money on monday that. It's on monday. Yeah. That's no problem. So it is forecast to be in the next month. Right. So so are we saying if we were here next wednesday instead of here today, that this number would be significantly different. Some different. Not significant. I've heard different numbers but 300 million.

Our current forecast provides forecast is 99.6 million above on the growth side. And for the first quarter and. 89.0 compared to the forecast on a net basis. And this is what the tax issue is about. The graph on the right side showing use tax for going back to 2018. Use tax is something that gets paid when they when the sales tax is collected by a retailer is is the taxpayer owes it to Nebraska. Whether or not it was actually collected by the retailer. Quite often. They used to tell me that quite often business businesses that buy fixtures and buy, not a state buy major company directly in the manufacturer so they won't be sales tax on these tax when you place it in service. The one interesting thing about this that I had heard from some of the big data center companies back when I was at revenue, was that they pay use tax on the servers. You know, they put them together themselves that get the chips and components from all the places, but servers together. And they replace that service. They'll pay the use tax. So right before the data center opens up, you can expect a big bump. And these tax. So we've seen that. I think that we were at 71 million. And that was way higher than the $2,021 million a year average prior for 2006 on. And then we didn't see another big bump until fiscal year before last. It was $90 million, and then it was $223 million last year. It has slowed down maybe a little, but not much. Let's see one. One of the things I did take a look at was that $223 million is tax. If you divided that by the state sales tax rate, you get this number or something better than $4 million. But which is right at 2% of the state's total output for 2025. And I've heard that that the us economy is running maybe 2 or 3% in data centers. And we haven't really seen anything like that since maybe the late 1800s when the railroads were building out. So this is that type of that kind of technology and that kind of an issue. Our forecast doesn't does include a fairly high number and use tax. But we kind of think that that's sort of a middle range number. It's not not a lot of big news, but it's a lot of maybe refreshing of current servers and things that used to have to be paid for. The graph on the, on the right side is what the services are showing. Got february. S&p is in red. They expected an increase in here about. Oh last year. We expected it to hit kind of this peak. We're probably right about here now. And then. Then they expected it to decline a little bit and then then begin its increase by october. They've completely changed their mind.

So you have to have those employees working for a full year. So the data center pretty much has to be in operation for a year before they even begin to qualify, go to the department of revenue and ask for a refund, which starts at qualification on it and. Advantage. So there's probably another depending on. The company and how how well they're working together with the auditors. It could take six months to a year, and then they'd have to come back and get the application together. So I'm thinking typically 18 months to two years after that. So the problem is we don't know what month. We don't even know what fiscal year that will happen. But we don't certainly don't know what month. How do you handle you for the forecast? Spread it out. Revenue has some indication like when they've got an application for a refund so they can work out. Forecast. It's probably goes six months in advance. It's probably pretty easy forecast. And so we'll take that into account. The rest of it we're just making our best guess. So so for the 227 million fiscal year end 26, that's gross. Before refunding, do you show any refund coming out in fiscal year 2026 or 0? Not, not for that. Okay. I think we've got a 100 million coming in from some previous. Some of the previous year's tax and I. Want to say there is a baseline in there, probably 25 million now. And it's probably not data centers. So take it to an extreme here. Let's say that quadruple $1 billion a year in three fiscal years. And then data centers construction just collapsed from that point on, maybe, maybe the universe determined that there were enough out there the moore needed. Does that mean that in 4 or 5, six years, we're going to have a lot of refunds, but no income to offset it? Potentially. Thinking about this, it does feel a little bit like a ponzi scheme. Not that we're trying to defraud anybody, but, you know, we got more money. We got money coming in at a different time than what it's going out. And very large amounts. So. That is going to affect the forecast going forward. So following up on richard's question because it's a it's something I'm thinking about. So when they go to replace the chips in those in the servers, do we get use tax or sales tax off that? So it's the chips continue to evolve. We're going to. And they get more expensive. We're going to continue to have this same issue where we're going to be getting a. We're going to be taking in use tax and then turn around and refunding it out 24 months later. Not necessarily, but at some point you have five years in advantage. You have five years to to earn your. Earning your credits. So period to carry over.

Some of that could be a reduction in the ptf going into corporate. The gross corporate tax. Dave, is the percentage wrong on the far left column, the 78 million being a higher percentage than the 147. Potential? Yeah, just doing quick math. I think it's more like 1.2%, but it could be. I mean, the the net revenue revision is consistent with the dollar amount. I just think the percentage may be incorrect. Yeah, that does look wrong. Probably one I think it's 1.2. Yeah. Yeah. The on that the the revision to that. So I made the same mistake on the side to. That, say once again that the sales and use tax is, has a lot of. Use tax assumption based in there, assuming it goes up for a couple of years and then settles down to a new normal, maybe $100 million. And that. So that doesn't include any of the gigawatt scale plants or anything else that's been talked about. That's we're just kind of assuming that we're pretty much down to the expansions that were anticipated with the current projects. The three current projects do have some ability to expand, and if they do, according to their stated plans, then there would potentially be some more money. But it's a question of whether or not they can. Companies can afford to do it and borrow the money if there's a revenue involved with that. And I think that's still kind of an open question, but I think we'll kind of settle back into a new normal, at least based on where we're at today. The net corporate tax. We've reduced that on the movie side by 24 million. Net miscellaneous is now about 1515 million. So total net revenue on the moody's forecast is. Now 6.929 2.93 million. Billion. And it's a $147 million million dollar increase over over the current forecast for the current year. For next year, we're looking at net sales and use of 2.2 billion 923 on the s&p side. And for moody's 2 billion 921 net individual income tax is 2,000,000,007 85.5% growth for over the over. Newport provides forecast here and moody's. It's. We expect it to be 2.85. 7 billion. Net corporate tax is going to be. We expect it to be up about 6.9 million 690 million. On. On the s&p side and 6.8 6,000,686 million. Moody's side net miscellaneous taxes up about the same amount 643 million s&p and 600 466 million. Moody's total net revenue rising up 1.8% to 6,861,000,661 million. Total net revenue on the moody's side, rising down from the current year forecast for next year to 6,930,000,000. For the next year. And the the detail is on page 15 and 16 of our book that their total net revenue. We're looking at 6,857,000,000 on the s&p and 6,000,000,923 moody's. And this is what it looks like. Net gross. Total net total gross. On the graph.

Prices are high as the end of the year, you get motor vehicles and taxable sales, rural counties that you see. Briese, you'll see, you know, and a lot of. You know, we know it does have a big effect, but. The effect really it's interesting how it does get rolled through. I mean, we used to be an ag ag state gdp was fairly accurate, fairly low per capita. But now that we're turning, instead of exporting corn and getting the gdp amount of the price of the export, we're turning it into ethanol, turning it into industrial chemicals. And a lot of other things are high value. So it's greatly increasing our gdp. So. That's an important part of the economy. But it doesn't really show up in a lot of the a lot of the statistics. It's a little hard to get a good handle on the impact. But I know. I've been working on some research to try to quantify what happened to the state economy between 1967, when data for industry data. First year and 1997, when I switched over to the. Makes something clearly happened. The state became. Its economy became more diversified. And so. Economists were talking about the old days when there'd be a they'd be an aggregation. And Nebraska. State is getting hit. But we never. The other state university never said national and the other way around. If there was a national recession, you wouldn't see it necessarily in Nebraska economy. And now we've seen the follow up. So. Something that. Yeah. Dave, what is the 40, 45 year average of general fund revenue growth for the state? Is it about 5.2%? Does that sound right? And I'm talking rate rate and base adjusted. Yeah, I. I have that with me, but I think it is correct. Yeah. So so it's about 5.2%. And the department's projections for the three years in question here, your rate and base adjusted growth rate is closer to upper 3%. A little under 4%. Correct. Yeah. Most likely. Yeah. And then that follows four years of rate and base adjusted growth of, I think less than 3%. So we're talking seven years in a row here of revenue growth below the average. Is it reasonable to predict that going forward the next three years that that lower growth continues? It seems like it the rate base adjustments are done going forward. Instead of looking back, by criticism and looking at that. So you don't sort of based on what the fiscal note said at the time, rather than what what really happened, you can't go back. Or we could go back and look at what the what the impact of the tax cut was actually and build that in there. So you might see a little bit of different growth rate, if that was a good question. But one would one would hope that those projections would be reasonably accurate.

Years, it just seemed like there's a divergence there that gets to it's actually a pretty sizable number, 207 million in the 2028, 2029. It just seemed like a pretty significant difference. Is there anything specific or is that just forecasting and assumptions? And it just seems statistically significant difference? Or do you know something about that? David doesn't know. Why we have an independent. We don't talk to each other. We forecast. It. Different people have different data usage and service. But do you have. Access to information that his department doesn't have and vice versa? Not really. I mean. An accurate data. We have data. I don't think that. Aggregate data. He does have ideas about certain things that happen that that would affect maybe too few taxpayers in aggregate, make public opinions based on facts. Interesting. David you answering a question or are we done? Oh, okay. I saw you looking down trying to see kind of what? Any other questions? The differences. I think we're lowering, withholding. And I it's one of those things if if I was forecasting today, probably give you a different number than I did when we set that down ten days ago. That's why. Yeah. So we'll call it good for today. But maybe I'll ask one more question. I might maybe this is a question that we must ask later. And I know I've seen this number before. What is the lfo prelim number. That's that's pre-filled in 2028, 2027, 28 in 2029. What's the origin of that number? That's the yeah. Good. Yeah. So it's a number populated. By our office to estimate revenues for the years beyond when the forecast for makes a determination. Right. And typically our office has used a historical average methodology to calculate those numbers. So it's based on this point of time a little bit to some of the reasons. Question about it is calculated based on the pattern of economic revenue growth that we've had over time. The average over the past 4 to 5 years or so is about 5.2%. And so we have seen patterns where over the course of five years or so, there's, you know, approximately a few years above average and a few years below average. And it works out to be close to the average sometimes. But over time, it definitely follows that cyclical pattern. So we use that to determine the numbers for that year. They're not they are not the same as what the forecast models show for those two years. So they are a different number. It's based on this cyclical history of the economy and how it's affected our revenue growth. It is not the same number as what would be calculated with using the national services. And the forecast. Model is more more of a backward looking estimate than a forward looking using economic assumptions. Yeah.

And also thank all of your members of your staff, your economists, statisticians, analysts, and probably a few other professional groups I'm not thinking of right now. I know it's a team effort on your part, and we appreciate all the effort that you put into it. With that, we'll go to the next agenda item, which is a discussion of board members. And steve, if you don't mind, we'll start at your end of the table. Okay. Again, let me just kind of reiterate some of the things I pointed out before. I think interest rates are going to be higher than than anybody, apparently than anybody else does, because I think they'll go up and I think it'll stay up for a while, because I think inflation is going to stay up for a while. So I'm just worried about that. That's something that we're seeing. And that's probably because the price of oil, which I spend a lot of time thinking about, is because we do energy investments, the price of oil. If you look at the forward tables and the price of natural gas are both higher than I think moody's or s&p is taking into account right now. So that's that's information that you guys I mean, who knows? I mean, you can pay your money. You can buy options and bet with me against it or for it. But the price of oil is the price of oil. And that will cause, you know, if you'd asked me in february, I wouldn't have predicted an iran war and b, I wouldn't have predicted that the iran war was going to last this long. And it has changed a lot of things, but mostly the price of oil, which what we haven't taken into account is the fact that it's going to last a lot longer, because we've drawn down all the reserves across the world at this point in time. So you have to fill up those reserves again so that that's a worry I have. I think the economy right now is and, you know, it was I was surprised it was right in one of the articles I was reading for this morning's wall street journal, they were talking about how the, how we're living on, you know, we're living on the data center building right now. That's what's driving the economy. All the growth in the economy is coming from that. And that's a big problem, because what it does is it sucks capital away from other folks. So as interest rates, even if the even if the iraq war stopped, we the price of oil started to come back down is the data centers continue to build. They're going to continue to draw capital away from everything else, which is going to keep the price of of money, which is what we call interest rates up high for things like housing and other business development.

And he feels that's why multifamily and build to rent homes are still doing all right. A realtor I visited with stated sales have certainly slowed boom. But he also said high end kind of still selling commercial seems to be okay, but there's sure a lot of retail space available. Residential electrical contractor I talked to tells me his home buildings have no optimism whatsoever. Traffic looking at new homes is down 80%. His cost of just on materials 5% or more. And he's a volume buyer, which is a big deal in our business. And he knows that with the pullback of work, he knows the builders are going to be wanting some reduction in his prices, and he's not sure how to do that. He's looked into some small commercial stuff to keep busy, but that market is fiercely competitive as everybody's looking to keep busy. He talked with fuel prices up, even temporary heat will be up significantly this winter as they as they work on what they've got in greater omaha, it appears that large commercial data and healthcare is doing well with more to come. Interestingly, nationwide, in the 12 categories of construction markets, only data centers and power are up in the last year. Everything else is negative manufacturing. I think if I remember the I got it in here down 30%, something like that nationwide. Not not here. Let's see. Of course, eastern Nebraska is still pretty positive, even though like kellogg's and schuyler mead have both closed as announced. And that affected about 700 workers. That wasn't helpful. Costs are causing some headwinds, without a doubt. Tariffs have certainly hurt construction costs. High health care costs for annual plans are up about 16%. Service vehicles and other fleets. We all know about gas and diesel costs and vehicle insurance. Insurance is certainly up in the double digits. The bright spot is, of course, data centers and everything they touch. The data center phenomenon is going to change the world of construction. We're seeing extra per diem wage incentives higher and higher your wage levels to get people to build them. And it kind of hurting the other markets. As the race for tradespeople intensifies. There's a lot of movement of trades folks between jobs, even same jobs, but different contractors. Imagine going into one gig here, coming back to the other gate on the other side, the smaller contractors are having trouble competing in for the small and mid work, and they have issues, manpower that is leaving or could go to bigger jobs. And how do they compensate their good people to stay? Well, not driving up costs for the customers they've built in relationship, they've built over the long time. And one guy told me, he says, or do we even bid a job because of the worry about whether we can staff them or not. Which to me is really the scary part.

But so so I guess I just mentioned that macro because that certainly colors a lot of, of my thoughts. And I would double down to on a comment that she made about data centers and the capital that they draw, because they're not just drawing capital, they're drawing it away from industries and things that drive employment. And certainly data centers are providing some very significant temporary employment. What's that long term outlook? But as far as western Nebraska, you know, overall, you know, okay, I definitely wouldn't make a call for any better than okay. You know, with the year that ag is having, you know, I would have a bit of a storm cloud, if you will, on these comments, but it's not a real storm cloud because we don't get storm clouds in the rest of this in western the rest of this year. There's no rain. You guys got it all down here. So and that that lack of water really, you know, caused a lot of issues in acres planted yields a lot, a lot less money spent in town on fuel, on tires, on inputs. And definitely our businesses are seeing that saying their sales are down year over year, which when you factor in inflation is, is a problem. So so there's, there's stress due to that lower spending levels. Certainly there's, there's areas that shine in there and it's not as bad as it, as it, as it would have been sugar beets, which is not a, which is a very significant part of certain areas of western Nebraska definitely had some negative outcomes this year. Cattle, okay. Prices are off a little bit. Margins are tightening. But but it's okay as far as mortgage or housing, it's interesting because we're seeing same things there as far as slowing down time on market is up something more of a buyer's market. I'm not seeing any price adjustments. So so that's good. So definitely overall, I would say sentiment would be down a bit due to those ag conditions. But definitely forecasting improvement in 2027. Yeah. Thank you. Zach. I guess you were a little more confident about the farm economy than I am. I guess I see cattle feeders that are going to lose money this year. And it could be a large amount of money depending on how you're hedging or not hedging. You know, the market just in the last two days took $10 off. And that's a significant move. And in this economy, the I would almost describe it based on the boards I serve on and people I speak with from western Nebraska through eastern Nebraska, that we'll call this a muddle through economy. We've got to get the pig through a python with data centers. And I'm worried about what's. When does that money go back out? When do we stop getting the sales tax?

In the meantime, the economy and kearney buffalo, buffalo county is stable. We do have modest growth. Unemployment is just 2.2%. Now that that compares favorably to what it was a year ago, but not far from us. You might recall the tyson plant closing, you know, in lexington and there september unemployment rate was 12.2%. So it's come down a little bit, but it's still very, very high. So not not every area in central Nebraska is the same in terms of the strength of economy. We have the expanded unmc presence in kearney, which is added to the economy. We have a new kearney regional medical center campus that's being in the process of being built. And so so there are a number of positive things happening in kearney right now. But but still, you throw those in with with the exception of the data center, it's still, I would say, modest growth at this point. Now, having said that, just for a personal perspective, since data centers is really what's driving ai. I'm not a high tech person, but my son is, and he got me involved with one of the open models on ai a few months ago. Not the free version, but the paid version. I'm not going to mention its name because I'm not here to to promote one over the other. But I will tell you that my usage of that has been totally transformative. It has completely sold just from, from a retail consumer perspective, it has completely sold me on the benefits of ai. And that's not even adding what is going to be done on the commercial side. Every everything I think that we're used to doing is going to change somehow. I think how we do the forecast in the future is going to change because of ai. I don't know how, but I can't believe it's not going to change somewhat. So for anyone in this room that hasn't, at least using the free model gives you a little idea as to what it can do. I would encourage you to do that because it will open up your eyes to the possibility that's out there and how it can transform your business, your life, your community. It's I'm old enough to remember before there was an internet and I thought when that came along that that was real impressive. This is ten times more impressive than the internet. So just keep that in mind as you think about your own personal use of ai. And with that, I'll go over the top. Thank you. And thank you folks for your work and your work, your teams. My goodness, a lot of a lot of hours go into what you do. I know that great comments here, everyone. A couple of things I'll hit upon just very briefly, seven years of below average actual revenue. Excuse me, base adjusted revenue growth does seem very odd to me.

I'd also say based on the amount of money that's been spent on these political campaigns the last two weeks, there's plenty of cash around. And I think we're probably all ready for it to be done, except for maybe steve over there at this radio station. So hopefully some of. And I guess I just close and say, you know, steve mentioned, you know, the narrative coming out of the meeting with with miscellaneous potentially going down, but I think to Senator grassley's point, you know, it's going to look like it's potentially looks like we come down a long ways from where this preliminary number is that we haven't even been hitting for the last seven years plus. And so I think at some point, I've got to put it in perspective of what the number you're actually comparing this forecast to. Thank you matt. Yeah. Thank you for letting me go. Last. I can say a lot less that way. Certainly agree. It's interesting that the tailwinds are certainly driven by one industry so much that scares me. Whenever you've got one thing driving so much. We've seen a lot of what john talked about just anecdotally with the small commercial. We've seen just where I work, the bids coming in for our construction are coming in so low, we're actually sitting down with the contractors to say, are you comfortable with your number? Great problem to have, but it does cause me some concern that there is exactly what john's pointing out. Also agree with a lot of what steve said with positives and negatives. Also, the transfers in, I think is something that is a great point of how we describe this, how this is accurately portrayed as opposed to the quick snippet is very, very different with what these numbers are likely to be when we vote. And then finally, also thank you. Several people have said it. Not only a lot of work goes into these projections, these books, but it's also daunting thing sometimes to sit in that chair and get the questions and the way you handle them. Very much appreciated. Have you been in that type of chair before? I have been in that chair for a number of years. Yes. So I, I have some empathy. Well. Thank you for your comments. Anybody else have anything they want to share? If not, it's time for the fun part. Of our meeting. And this is the forecast, the first just to remind everyone to put your name on each of the three sheets so you get a return to you. Okay, okay. You get right. We'll start with the sales and use tax. Fiscal year 26 and 27. And I will. I just can't read it. I can't read it. Can't read it over there I can. It's got to have. Yeah. So I can see it. Okay. I is 2,000,000,923.

Everything in the. Yeah I lost that. 3093 back in. You're going to do it. Yeah. Okay. Yeah. We could take out both the high and the low and see where that leaves us. We got the 2760. 2,000,000,874. And what's our current motion. 2.85. Motion on the table is 2,000,000,850. Take out the high and low. It's 2 billion 875. Is that what I heard? Yes. 885. 885 is what it is without the high and the low. 885. Yes. Thank you. No. That's. That's right. I'm sorry. 7875. Sorry. That's what I thought. Thank you. Thank you for clarifying that. So we have a motion. And second any discussion. If not roll call. Mr. Mcguinness. No. Mr. Miltenberger no. Mr. Meyer. Yes. Mr. Celine yes. Miss. Linehan. No. Mr. Von. Yes. Mr. Briese no. Mr. Kauth no. Mr. Wilson yes. I get 5 to 4. No. Close. So back to the drawing board. So is there a competing motion? I'd make a motion for 2,875,000,000. Second. We have a motion a second at 2 billion 875. Any discussion? Hearing none. Roca paul, please. Mr. Miltenberger yes. Mr. Schuyler no. Mr. Celine yes. Miss. Linehan yes. Mr. Von no. Mr. Briese yes. Mr. Harp. Yes. Mr. Wilson no. Mr. Mcguinness yes. Yes. 6 to 3 in favor. Motion carries. 2 billion 875 for individual. This is individual. Now the corporate and miscellaneous together. Individual. Sorry individual. My apologies. Life is. If it's on the radio that's. Not ours unfortunately. Wishart. Richard. Oh I'm sorry. I is 3,011,000,000 below is 2,900,000,000. The average is 2,949,000,000. Mr. Chair, I move. 2,950,000,000. Second. We have a motion and second for 2,950,000,000. Any discussion? Hearing none. Roll call. Mr. Briese. Yes. Mr. Clerk. Yes. Mr. Wilson. Yes. Mr. Mcguinness. Yes. Mr. Miltenberger. Yes. Mr. Yes. Mr. Celine. Yes. Miss. Linehan yes. Mr. Von I will. Go, yes. Motion carries. We will now do corporate and miscellaneous taxes together. Oops, sorry. We used to be. Richard. If they do. By the way. No bill. Okay. For corporate. Corporate, the eye is. 685 million. The lowe is 660 million. The average is 675 million. We have a motion. Of 675 million. Second. We have a motion and a second for 675 million for corporate. Any discussion? Hearing none. Roll call please. Mr. Clerk? Yes. Mr. Wilson. Yes. Mr. Mcguinness. Yes. Mr. Miltenberger. Yes. Mr. Celine. Yes. Miss. Linehan yes. Mr. Von. Yes. Mr. Briese. Yes. Motion carries. Miscellaneous. Gentlemen. I is 300 million. The lowe is 290 million. The average is 295 million. Motion for 290. Sorry. No. Go ahead. And jump in. 295 million. Second. We have a motion for 295 million. Any discussion? Hearing none. Roll call please. Mr. Wilson. Yes. Mr. Mcguinness. Yes. Mr. Miltenberger. Yes. Mr. Schuyler. Yes. Mr. Slane. Yes. Miss linehan yes. Mr. Vaughn. Yes. Mr. Briese. Yes. Mr. Colin. Yes. Motion carries. Thank you. In the total. Total is 6,795,000,000. We have a motion. So moved. Second.

Mr. Karp. Yes. Miss. Linehan. Yes. Mr. Mcguinness. Yes. Mr. Mascara. Yes. Mr. Berger. Yes. Mr. Celine. Yes. Motion carries. Thank you all. We're not quite done yet, but we're close. Originally a little history there in the modern era of forecasting. Since I've been here, whenever a board member leaves, retires from nefab who served with distinction in long tenure, we've always recognized them at the meeting because we didn't have as much time to plan this time as we normally do. We decided to hold off in that recognition until the february meeting. I'm going to be working with with zach and wahoo, dave and keisha to come up with some ideas on how we can do that in any other board member that would like to be involved, just let me know. Whatever we ultimately come up with, we'll send out the recommendation to the full board, and the full board will ultimately make that decision. But the plan is to have everything done at the february meeting. Now it's time to select the date for the february meeting, and the last friday. Is that what you david wahoo would prefer? That's the 26th of february. And for the new board members, what we we try to do is to come up with a date and time of day that works with everyone. So if friday doesn't work for everyone and we can move it back to thursday or friday does work in the morning versus the afternoon, we'll try to be as accommodating as possible just to make certain we have all members present. So I just want to say something really quick about the february meeting. It does work better if it's in the morning because of the hearing room availability. Okay, that would be great. So my question to my fellow board members does the morning of february 26th friday work for you? Yes, sir. I can make it work. Yeah. Okay. I don't see any notes. So when you talk. Morning, are we talking? What time? Typically, we can set the time as at 10:00. 10:00. Okay. So I'd like a motion. And second, for the february meeting of february 26th, friday morning at 10 a.m. So moved. Second. We have a motion. Second. Any discussion? Hearing none. Roll call please. Mr. Briese yes. Mr. Burke. Yes. Mr. Wilson. Yes. Mr. Mcguinness. Yes. Mr. Yes. Mr. Moser. Yes. Mr. Celine. Yes. Miss. Linehan. Yes. Mr. Warren. Yes. Motion carries. February 26th. Friday at 10 a.m. Will be our next meeting. This is a time of a meeting where we open up the floor for any public comment. If anyone here present would like to address the board members of nefab, this is a great time to do it. And we have a podium set up, so. Looking around, I don't see anybody approaching. Please come on up. And for the record, identify yourself. You don't really. We know who you are.