Nebraska Has At Least $2.88 Billion In Surpluses of the Taxpayers Money it is not using.

  Prepared by Scott Scheierman, FY 2002 Report Home Page Flags courtesy of Robesus Inc.



The State of Nebraska at the State-level has approximately $2.88 billion of the taxpayer's money it is not using, i. e. surpluses equal to $1,679 for every man, woman and child in Nebraska or $6,715 for a family of 4. This does not include all the additional surpluses that exist in the school districts, cities, or counties in Nebraska.

If the $2.88 billion were returned to the people, the State would have a huge surplus to refund to the taxpayers. Such a refund would help payoff credit cards, create jobs, increase wages, increase State and local government revenues, dramatically increase the economy, and create the greatest economic expansion in the history of the State. Everyone wins.


The 2001 estimate of unemployment was 28,868. The table below demonstrates that if the $2.88 billion were returned to the people, 57,874 jobs would be created. There would be no unemployment in Nebraska, but a labor shortage.

In addition, unemployment claims of approximately $132 million could be saved.

The Nebraska review is shown in Exhibit A below in this report.

Simultaneous Budget Deficits/Shortfalls and Financial Surpluses

This is the most deceiving topic that governments, politicians, and the news media have conveyed to the public about governmental financial matters. In realty, a government can simultaneously have a budget shortfall and a financial surplus of the taxpayers' money.

The problem can be broken down into three areas:

1. The budget only covers a small portion of the State's financial condition. There are a group of funds not part of the budget process. The complete list of funds and budgetary requirements are found in the Comprehensive Annual Financial Report (CAFR). This report depicts the complete financial status of the State. The budget only covers a portion of the financial resources.

Unemployment Compensation had a profit of $1.5 million, but also had a cash-investment reverse/surplus of $221 million.

2. The budget is current revenues minus current expenditures. Previous years' revenues are normally not considered in the current budget, but should be. In other words, the previous years' revenues are not recycled back to the current budget process.

Licensing and Regulation made a profit of $39.4 million and had a cash-investment reserve/surplus of $206 million.

Game and Parks had a net expense of $11 million but it also had a cash-investment reserve of $60 million. That represents 5.5 years of reserves.

Look at Other Special Revenue. It had a net expense of $8.2 million, but a reserve of $155 million. That represents 19 years of reserve.

3. The budgeted funds and non-budgeted funds should have zero-based funding on a pay-as-you-go basis. What this means is that you budget to have a zero fund balance. If you plan to spend $100 you budget for $100 with no excess or reserve allowed.

These are only four (4) of the 37 or so funds listed in the report below that make up the $2.88 billion in surpluses.

What are these surpluses we have been talking about?

Government surpluses, as used in this report, are funds that are not required or needed for the operation of all government operations, funds, accounts, agencies, etc., directly or indirectly, for the year(s) covered by the budget which is usually one year. Theoretically, at the end of every fiscal year, governments should have little or no cash/investments on hand. But what we have found is that most governments have huge amounts of cash and investments on hand at the end of the fiscal year. And somehow these cash and investments are not being recycled back through the budget process the next year, but are being held year-after-year and the income and amounts keep increasing.

What Should be Done With the Surpluses?

Alan Greenspan, Chairman of the Federal Reserve, Told Us:

In his testimony to the Senate Humphrey-Hawkins Committee, Alan Greenspan, Chairman of the Federal Reserve, in late July 1999 gave us a clue on what he thought should be done when he stated:

“I'm of the old fiscal school that you raise revenues for basic government purposes and if you don't have those purposes you give the money back or you don't tax it... My experience is that private rates of return are significantly higher than the governments rates of return.”

What did he say?

  • If a government collects too much from the people, the government should give it back.

  • It is better to let the private sector use the money than governments. This we will prove beyond a reasonable doubt.

Government Surpluses are the taking of the peoples property without the right to take:

In a recent Wall Street Journal article, Mr. William P. Kucewicz, made in-depth observations and insights regarding the role of governments holding surpluses of the peoples money. We could never have said it as eloquently as he has:

"...Almost no one seems to note that a surplus at any level of government represents money that would otherwise be used for consumption or investment by those who earned the income in the first place. And to the extent that it's squirreled away by government and isn't used, say, to retire debt, it's a drain on the economy.

Also missing from the discussion is a basic question: Whose money is it, anyway? Government's moral legitimacy is derived from the people. This cornerstone of the classical liberal tradition presupposes that government's precursor is the individual, endowed with a natural liberty as a free moral agent...

...Although taxation is legitimate, running a government surplus isn't. It represents a taking by the state, because it exceeds the government's contract with the community. It is no different than if a federal agency were to take a person's land or possessions without just compensation (an activity barred by the Fifth Amendment). Excess taxation isn't what the people bargained for.

...In presuming entitlement or authority not ceded by the community, the state abrogates its moral pact with those it governs. Its power is no longer derived from the people, whose rights to liberty and property it boldly denies." (Emphasis added.) (Mr. Kucewicz is editor of the global investment site

The State Legislators

The State legislators should include in the next year's budget the previous years revenues not spent as indicated by the CAFR. These were once a revenue and should still be considered revenue for budgetary purposes.

Also, they should consider a zero-balance budget concept for all budget and non-budgetary items in the CAFR including the College and Universities and the Component Units.

Budgeted expenditures (for the budget) should be last year's expenditures (from the CAFR) adjusted for demonstrated requirement changes in project, program or services. An increase in requirements should include the costs of these additional requirements. Conversely, a decrease in requirements should result in a decrease in costs associated with the decreased requirements.

The State legislators should take into consideration the entire financial condition/status of the State in the budgetary process by including the fund balances in the CAFR as being a part of the budget.

This system is covered in the CAFR Budget System.

If the State holds the excesses/surplus, it will earn 4% to 5% on that money. If the State returns the money to the people it will receive 20% in revenue because of the increased economic activity. This is elementary economics.

Laws need to be changed

There are laws that state this or that regarding the use of some of the funds. Man made the laws, man can change the laws. How much effort would it be to include at the end of every law "...or if considered excess or not needed for the current operation that the funds will be refunded to the taxpayers?" See how easy it is.

At one time every law had its place, but things change. The laws need to be reviewed for change to meet the current needs of the government and the people.

If this were accomplished, the State would have a huge surplus to refund to the taxpayers. Such a refund would create jobs, increase wages, increase State and local government revenues, dramatically increase the economy, and create the greatest economic expansion in the history of the State. Everyone wins.

If you want to know the financial condition of your government(s), do not look in the budget. Get the CAFR.

The Synergistic Magic of Economics.

What happens when the government holds the $2.88 billion.

  (In Thousands) Investment Income   Per    Capita Family of 4    
  The government holds and investments the surpluses at 4.5%. 129,534 76 302  

Here is what happens when the $2.88 billion is returned to the taxpayers (the private economy).

  (In Thousands) Surplus
Per    Capita Family of 4    
  The surplus is returned to the taxpayers. 2,879,531 1,679 6,715  
  Wages are increased. 1,439,765 839 3,358  
  State government revenues increase. 578,738 337 1,350  
Local government revenues increase. 462,990 270 1,080  
  Federal government revenues increase. 1,157,476 675 2,699  
  Total Benefits...   3,800 15,202  

In addition, 57,874 jobs are created. This is why it is disastrous for governments to hold excesses of the taxpayers money.

Note: The economic impact analysis above is further explained at this location.

When governments lower taxes, government revenues increase

Yes, this is true. Why does President Bush want to lower taxes - to stimulate the economy so the Federal government can earn more revenue. There are those in Congress who say lowering taxes will result in deficit spending. This is absolutely false. If anyone is interested in the proof for this principle, here is where it can be found -

The business community suffers the most.

Before the 9-11 tragedy, President Bush and Congress provided tax rebates which averaged $427 for every American. This was to create an additional $60 billion in consumer (economic) spending, turn the economy around and create jobs for the unemployed. However, 9-11 change that and an additional 1 million jobs were lost and the economy, already in a recession, continues to deteriorate.

As the above economic impact chart shows, if the State returned the $2.88 billion in surpluses to the people the State economy would grow by $3,374 per capita. That is 8 times the amount the Federal government used to stimulate the U.S. economy. Businesses net incomes could double or triple. This is elementary economics.

There is no need for a budget crisis, an economic recession or unemployment in Nebraska.


For a list and response to the various excuses provided by governments for holding excesses of the taxpayers money, please go to this link.

Forget the excuses. We are talking about giving the money back to the people because it is surplus to the immediate needs of the government. Is there a law in Nebraska that says the surpluses cannot be returned to the people either through refunds or tax/revenue reductions? If there is, it should be repealed. We do not need a communist governmnt in the U.S.

What you can do

Tell a friend or relative about this report.

Did you know that if you tell 5 people about this report and ask them to tell 5 more people, that in only 8 iterations, 390,625 people will be notified?

Contact your State representative (or all your State representatives).

Send them an email, send them a copy of this report, and ask them to provide you with their results of analyzing the CAFR. If you only want to provide a link to this report, the link is

Locating Your State Representative

Locate Your State Elected Officials Here:  

Exhibit A

The 2002 CAFR is located at:

Items not Included

The following items are not included in the amount of surplus shown:

-Buildings, roads, bridges, land (not for sale), and equipment.

-Deferred compensation plans for employees. These are plans in which the employee contributes to his/her retirement over and above the normal employee retirement contribution.

-Any fund that is 100% supported by donations, bequests, gifts, endowments, etc. These are not taxpayers money.

-For Colleges and Universities. All endowment and similar-type funds should not be included as surpluses. Sometimes these funds are combined with other college/university funds. We are interested in surpluses, so in these cases the total amount should not be included.

-Funds in which the revenues/contributions are 100% held for other individuals, organizations or another government.

-Funds that are required by law in which a bank, financial institution, insurance companies, etc. are required to deposit with the government a certain amount for insurance against the entity going bankrupt. These are not taxpayers' money.

-Retirement/Pension Funds - only included are 1/2 of the actuarially determined excesses, the taxpayers portion. The other 1/2 is the government employees portion.

How to Review the CAFR.

Here is the simple way to review the CAFR. (Amounts in thousands.)

1. Get a copy of the FY 2002 CAFR or download the CAFR-see above.      
2. Go to page 44 of the CAFR.      
3. Go to the column entitled University of Nebraska.      
4. You see the following:      
  Cash and cash equivalents... 209,654    
  Investments... 264,271    
  Investment in Joint Venture... 119,645    
  Other assets... 23,598    
                                Restricted Assets:      
  Cash and Cash Equivalents... 168,448    
  Investments held by trustee... 0    
  Total... 785,616    
5. Go to the schedule below and confirm the amount.      

Now, do this for every item listed in the Exhibit A below. You have just proved to yourself that the surpluses exist.

  Review of The State of Nebraska CAFR- FY 2002

CAFR Page List of Investments By Fund (In thousands) Surpluses Notes
  Governmental Funds:    
34    General 247,170  
34    Highway Fund 161,910  
34    Federal Fund 35,962  
34    Health and Social Services 348,859  
34    Permanent School Fund 324,870  
   Special Revenue Funds:    
72       Licensing and Regulation 206,339  
72       Economic Developoment 35,331  
72       Airport Development 3,775  
73       Game and Parks 59,725  
73       Energy Conservation 8,158  
73       State Building Corporation 488  
73       NETC Leasing Corporation 29,563  
73       Other Special Revenue 154,706  
70    Capital Projects Funds: 25,870  
     Permanent Funds:    
76       Aeronautics Trust 9,782  
76       Nebraska Veterans Aid 30,752  
76       Permanent Endowment 1,054  
76       Agricultural Endowment 1,862  
76       Other 453  
  Proprietary Funds:    
38          Unemployment Compensation 221,268  
           Nonmajor Enterprise Funds:    
80             Lottery Fund 9,528  
80             Excess Liability Fund 58,019  
80             Cornhusker State Industries 3,564  
     Internal Services:    
84          Buildings and Grounds 6,839  
84          General Services 5,075  
84          Communications 2,604  
85          Information Mangement Services 19,602  
85          Transportation Services 1,706  
85          Risk Mangement 28,543  
85          Accounting Services 1,291  
85          Other Internal Service 2,173  
  Fiduciary Funds:    
   Private Purpose:    
94          Vocational Rehabilitation Fund 4,083  
94            Canteen and Welfare Fund    
94          Escheat Trust Fund    
94          College Savings Plan    
94          Other Expendable Trust Fund    
     Pension: (1/2 the actuarial surplus)    
           Public Employees' Retirement System    
           Teachers' Retirement System    
59          Judges Retirement System 5,702  
59          State Patrol Retirement System 8,457  
     Agency Funds    
96          Local Government Fund    
96          Other    
  Component Units:    
44       University of Nebraska 785,616  
44       State Colleges 28,832  
  Related Organizations: - Financial data not provided    
47       Nebraska Educational Facilities Authority    
47       Nebraska Investment Finance Authority    
47       Research and Development Authority    
47       Wyuka Cemetary    
  Total Surpluses… 2,879,432  
  Per Capita… 1,679  
  Family of 4… 6,715  

Note: For those familiar with governmental accounting, for surpluses we basically used GFOA Balance Sheet Account Classification Codes 101, 102, 103, 151, 153, and 170.

This report was prepared by:
Scott Scheierman
Sutton, Clay County, Nebraska

For more details:


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