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The Legislative Performance Audit Act was established in statute by LB 607 in 2003. It replaced the Legislative Program Evaluation Act. A performance audit is an objective and systematic examination of evidence for the purpose of providing an independent assessment of the performance of a government program. These audits assess how well a state program is functioning and provide answers to the following questions. Is the program doing what the Legislature intended it to do? Is the agency administering the program meeting statutory and regulatory requirements? Is the agency running the program effectively and efficiently?
The purpose of the Act is to provide for a system of performance audits to be conducted by the Legislative Audit Office, under the direction of the Legislative Auditor. The Legislative Performance Audit Committee is responsible for overseeing the state’s performance audit process. The committee is made up of seven senators. In January, I was selected to serve as chair of the committee.
This year, the committee adopted three new areas to work on. The first concerns issues relating to the current functioning of the behavioral health system in Nebraska. Committee members are interested in where there may be gaps in behavioral health services across the state. The second is an audit of agency regulations that may be adopted outside of the Administrative Procedure Act, which means the public and other stakeholders do not have the opportunity to comment on the proposed regulations. The final area is the utilization of the long-term care insurance and tax credit to find out if these tools are increasing the number of people who set money aside for long-term care.
The Performance Audit Committee is authorized to introduce legislation. By rule, the committee is granted the authority to designate two priority bills, resulting from a performance audit or involving the performance audit process.
LB 538 was introduced by the Performance Audit Committee this year. The public hearing was held earlier this week before the Revenue Committee.
LB 538 seeks to implement the recommendations of the Tax Incentive Evaluation Committee adopted during the 2014 LR 444 interim study. The interim study was introduced in response to a 2013 performance audit that found the goals of Nebraska’s tax incentive programs were too broad to permit meaningful program evaluation. The Tax Incentive Evaluation Committee was made up of the Performance Audit Committee, as well as the chairman and vice-chairman of the Revenue Committee, and one senator appointed by the Executive Board. Evaluation experts from the Pew Charitable Trusts worked with the committee to help craft recommendations for a tax incentive performance audit process tailored to Nebraska’s needs.
LB 538 creates a process for ongoing evaluation of Nebraska’s existing and future tax incentive programs enacted for the purpose of recruitment or retention of businesses in Nebraska. The bill creates an evaluation structure that will produce information needed for lawmakers to draw clear conclusions about whether tax incentives are benefitting Nebraska’s economy and meeting program goals. LB 538 requires the Legislative Audit Office to conduct a performance audit of each tax incentive program at least every three years, to evaluate whether the goals established by the Legislature are being met.
Additionally, legislative performance auditors will analyze the economic and fiscal impacts of the tax incentive programs taking into account effects on businesses and state and local governments, economic development strategies, and the specific emphasis of individual programs.
Over the years, there has been much discussion as to whether our tax incentives serve as a good investment for our state. One of the missing factors in the discussion is a means to evaluate our tax incentives. LB 538 seeks to provide the necessary information.
If you have any questions on LB 538, the Performance Audit Committee, or on any other issues before the Legislature, I encourage you to contact me with your thoughts and opinions. I can be reached at District #1, P.O. Box 94604, State Capitol, Lincoln, NE 68509. My email address is firstname.lastname@example.org and my telephone number is (402) 471-2733.