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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 overreliance 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.
Click here for more from
Governing magazine
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