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From Governing’s Nebraska
Leaders in many states, asked to explain why their financial management isn’t as strong as might be, point to the recent sour economy as ample excuse. But Nebraska proves that fiscal management can be strong even while a state has to swallow a bottleful of bitter pills. In both 2002 and 2003, its revenue receipts were less than in 2001. Population growth is slow and the drought in the rural western part of the state has been unforgiving. 
But Nebraska didn’t turn to expediencies that will leave it with problems in the future. It didn’t divert tobacco settlement funds from their original use. It tapped its cash reserves appropriately but never depleted them. Budget writers held spending in check, implemented new enterprise-wide accounting and human resource management systems and kept up with facility maintenance needs. Part of the reason for Nebraska’s relative fiscal soundness lies in its willingness to share its long-term projections with the public. Five years ago, these numbers were contained in a series of low-profile documents that rarely reached beyond the top levels of the executive branch. Now, they are part of the public budget presentations every year. This long-term approach, which is also used by the Legislative Fiscal Office, helped the state avoid an over-reliance on one-time mechanisms to maintain budgetary balance. It also encouraged the legislature to seek a broadening of the sales tax base, which has taken place over the past few years.
This isn’t to say that the period ahead is going to be a fiscal picnic. As leaders aim to get the next biennial budget in order, they’ll be faced with the need to rebuild cash reserves and to increase pension funding substantially to keep up with actuarial calculations. Meanwhile, the formula for financing K-12 schools in Nebraska calls for about a 10 percent increase, and Medicaid is estimated at 8 percent. Another challenge: Nebraska lost a lawsuit concerning its disposal of low-level radioactive waste. A federal court ordered the state to pay about $150 million over a four-year time frame. At the end of December, the estimated gap between expenditures and revenues for the upcoming budget was about $233 million. One way Nebraska hopes to generate more money is through increased tax enforcement. It was one of 15 states to hold a tax amnesty program in the past two years. While there’s some debate over the effectiveness of these efforts, Nebraska’s had one very positive feature. Rather than use the proceeds from the amnesty merely to fill budget holes, Nebraska allotted a significant part of the take to increased enforcement, adding new audit staff and better technology for the revenue department. Hiring for Nebraska’s public workforce is flexible, and the state has worked on improvements in its recruiting. Public employee unions have agreed, for example, that experienced nurses no longer need to be hired at starting salary levels, freeing the state to give credit for prior nursing experience — an important change given the nationwide nursing shortage. Nebraska managers still have a lot of work to do in the area of workforce planning, which has been overshadowed by other issues over the past few years. This is also true of the state’s performance measurement and strategic planning efforts, which are spotty. In particular, managers could pick up the pace of training for the state’s new enterprise-wide accounting and personnel management system. So far, employees have been focused on how to use the new technology to re-create functions that were in place with the old versions. “I don’t know that they’ve really turned the corner toward educating managers on how to make the most effective use of the system,” says CIO Steve Schafer.
Copyright © 2005, Congressional Quarterly, Inc. Reproduction in any form without the written permission of the publisher is prohibited. Governing, City & State and Governing.com are registered trademarks of Congressional Quarterly, Inc. |
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