|
Introduction
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.
Unemployment
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?
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 www.GeoInvestor.com)
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 Effect |
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.
Excuses
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 http://www.cafrman.com/Articles/Art-NE-S1.htm.
Locating Your State Representative
|
Locate
Your State Elected Officials Here: |
|
|
Exhibit A
The 2002
CAFR is located at:
http://www.das.state.ne.us/accounting/cafr/cafrcon.htm
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: |
|
|
|
Enterprise: |
|
|
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:
www.cafrman.com
BACK TO
TOP
This
report can be copied, reprinted, and/or electronically transmitted to others
and/or printed in the news media. This report should not be used for commercial
purposes.
|
|