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As a bill makes its way through the legislative process, testimony at public hearings and debate on the floor establish the intent of the bill and its impact on Nebraskans. Once a bill becomes law, they are typically only revisited when unintended consequences emerge or problems arise. Legislators often fail to look back and determine if the predicted outcomes were achieved.
A performance audit is a systematic, objective analysis of a government program to determine if it is meeting the policy objectives it was intended to accomplish. In the Nebraska Legislature, the Legislative Performance Audit Office conducts independent analysis of statutes, programs, and agencies to measure outcomes against specific performance metrics. For the past two years I have served as the chair of the Performance Audit Committee, which works with the professional audit staff to prioritize audit topics, establish the scope of the examinations, and release the findings to the public.
In recent years performance audits have been conducted on ACCESS Nebraska, behavioral health services, specific economic development programs, and the universal service fund just to name a few. Each of the reports is available to the public on the Legislative Audit Office page of the legislature’s website. The data they contain provides important insight for how to improve policy and make government programs operate in alignment with their legislative intent.
In 2015, the Nebraska Legislature passed a statutory requirement that all state tax incentive programs undergo a performance audit every three years. The first audit of the Nebraska Advantage Act, the largest of the state tax incentives programs, was completed in 2016. Last year performance audits were conducted on the Research and Development Act and the Rural Development Act. The remainder of the incentive programs, much smaller in size, are currently scheduled for audits.
The initial audits of Nebraska’s tax incentive programs demonstrated the importance of clearly defined objectives, measurable expectations, and specific metrics during the legislative process. In the absence of these specifics, answering the question “is this program operating as intended” becomes a challenge. As chair of the Performance Audit Committee, I have been active this session helping address the need for better data about program performance.
At the beginning of the session I introduced a proposal to the Legislative Rules that would require any bill creating or changing a tax incentive program to include a logic chain with its statement of intent. This would detail the specific goals, metrics, and outcomes of the legislation on the bill at introduction. Although the rule was not adopted by the Rules Committee in its initial meeting, several senators have agreed to voluntarily develop this statement and include it with their bills. This will demonstrate how the process works and, hopefully, encourage adoption of the statements in the next legislative session.
The Performance Audit Committee has also introduced two bills that will improve the ability to conduct the statutorily required audits of the tax incentive programs. LB 935 improves data sharing between the three executive branch departments involved in the tax incentive programs–Revenue, Labor, and Economic Development–as well as gathers information necessary to analyze the jobs created by the incentives. LB 936 provides specific definitions to terms used to evaluate the incentive programs. Both have been designated Performance Audit Committee Priority Bills and were advanced from the Executive Board. LB 936 has been advanced through the first round of floor debate.
Looking back at prior legislation and measuring its impact is important to effective government. Objective analysis of both successes and shortcomings of a program help not only improve those programs, but also facilitate better bills in the future.