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Each year the various agencies of the state of Nebraska spend $2.3 Billion dollars in taxes and fees that are designated as “cash funds”. Many of the taxes discussed in recent weeks, including the gas, lodging, and documentary stamp taxes, are not accounted for in the $4.4 Billion “General Fund” of sales and income taxes, but rather are directed to special designated cash funds. These various cash funds pay for specific government programs. If you would like to look at the hundreds of different cash funds and the fees that pay for them, you can access a digital copy of the “State Government Cash and Revolving Funds” book on the Legislative Fiscal Office page of the Nebraska Legislature website.
Although almost never mentioned in discussions about tax policy or tax burden, these various cash funds represent a significant amount of money paid by Nebraskans. On a per capita basis, cash fund spending is about $4800 annually for a Nebraska family of four. More taxes are collected annually in cash funds than either sales taxes or individual income taxes.
Understanding where all the tax revenue for cash funds comes from and how it is spent requires a look at an organizational chart of Nebraska state government. We are all familiar with the three branches of government: executive, judicial, and legislative. However, within the executive branch of Nebraska state government are 72 different state agencies. Only 20 of these agencies are known as “code agencies”, which are managed by the Governor.
There are 52 state agencies that are not the responsibility of the Governor, but rather report to independent boards. They are referred to as “noncode agencies”. Their board members, within statutory parameters, set the rates of tax money collected. While the Legislature appropriates the “authority” to spend the cash funds, the budget specifics and spending decisions are the responsibility of the governing boards. While some of the noncode agencies are managed by elected boards, most are appointed with no direct connection to voters.
The Nebraska Constitution establishes 13 of the 52 noncode agencies. Five of these agencies are the constitutional officers elected by the voters of the state, including the Secretary of State, State Treasurer, Auditor, Attorney General, and Lieutenant Governor. The state Department of Education and the Public Service Commission are the most notable large state agencies that are not managed by the Governor. Three constitutionally established noncode agencies deal with higher education–the University of Nebraska, the State Colleges, and the Coordinating Commission for Post-Secondary Education. Two more are quasi-judicial agencies, the Tax Equalization and Review Commission (TERC) and the Commission of Industrial Relations (CIR).
The 39 other noncode agencies, established by statute, are a diverse mix of entities. Six agencies are funded specifically by ag commodity checkoff dollars. Ten are agencies that administer specific professional licenses, such as the Board of Landscape Architects and the Real Estate Appraiser Board. Some agencies oversee specific areas of commerce in Nebraska, such as the Liquor Control Commission, Racing Commission, and Oil & Gas Conservation Commission.
The sheer number of executive branch agencies–72–can be overwhelming. There is almost always a historical, rather than consistent rationale for the existence of many of these agencies. For example, licensing for your health care providers is almost exclusively handled through the Department of Health and Human Services, while land surveyors and abstractors each have separate state agencies. The checkoffs for dry beans and grain sorghum fund state agencies, while beef and soybeans do not. Specific services for the blind and deaf are each provided by independent organizations, unlike other disabilities. The Commission on Indian Affairs and the Latino American Commission are two state agencies administering programs for specific populations.
While several code agencies spend significant cash funds, notably Economic Development and Transportation, most of the noncode agencies operate almost exclusively on cash funds. With no direct connection to either voters or any specific office for oversight, these agencies are frequently overlooked. When a scandal emerges, such as the debacle with the Tourism Commission, public attention is focused on the specific agency. That accountability quickly fades as attention shifts to other stories.
The coming weeks will provide a deeper look into the financial details of some of the cash funds and the agencies that administer them. Paid through a myriad of small fees, the cumulative impact of $2.3 Billion should not be overlooked. They are dollars going out of your pocket to fund government services.