Budgets cut now; agencies next?

LINCOLN — Consolidation, and even elimination, of state agencies is being eyed by some state senators who see even rougher fiscal times ahead for state government.

Nebraska lawmakers just concluded a special session that closed a $334 million state budget gap, caused by recession-reduced tax receipts.

But a gap of nearly twice that size is projected by 2011. And with many experts predicting a slower-than-normal economic recovery, some senators are looking at merging or restructuring state government agencies to realize long-term tax savings.

“We have to be willing to look outside of the box at our state government right now,” said Omaha Sen. Heath Mello, a member of the budget-writing Appropriations Committee. “That's what voters voted for when they approved term limits — they wanted different perspectives and different ideas looked at.”

Some of the merger ideas floating around the Capitol are not new, and some senators are skeptical about whether such consolidations save money or just give the illusion of progress.

Indeed, a look at a couple of state reorganizations in recent years shows that they didn't result in a lot of savings.

But consolidations are getting a new look in a body where only 11 of the Legislature's 49 members have more than three years' experience.

Among proposals being studied:

Ÿ Realigning higher education to cut administration costs. Merging the state college system with the University of Nebraska system is one idea, thereby eliminating one of two governing boards and one of two central administration offices. Such a merger might also fold in the Coordinating Commission for Postsecondary Education, an oversight entity approved by state voters in 1990 with a budget that has grown to $8 million a year.

Ÿ Eliminating the elected office of State Treasurer and merging those functions with the Departments of Revenue and Administrative Services.

Ÿ Merging the Departments of Aeronautics and Motor Vehicles with the Nebraska Department of Roads, creating a Department of Transportation as seen in many states, including Iowa.

Ÿ Consolidating the Departments of Labor and Economic Development into a one-stop shop for creating jobs.

Lincoln Sen. Bill Avery, a former professor at the University of Nebraska-Lincoln, said he sees a lot of overlap in the administration of higher education in the state. He said he's exploring several options toward eliminating that overlap and reducing costs.

Why, he asked, are there separate presidents at the three state colleges, as well as a chancellor's office in Lincoln for those three schools?

Are separate state college and community college boards really needed, Avery asked, if there's already a Board of Regents governing the NU system?

“People argue that the mission of the state colleges is different than the university's,” Avery said. “But how different is (University of Nebraska at) Kearney's mission from Chadron State, Peru State and Wayne State? Don't tell me the Board of Regents couldn't manage all of those institutions.”

State Sen. Dennis Utter of Hastings said he's likely to introduce a bill to eliminate the State Treasurer's Office, a post that has drawn keen interest leading up to the 2010 elections after current Treasurer Shane Osborn announced that he would not see re-election.

Dissolving that constitutional office would also require a public vote before it could be achieved.

The state treasurer is an appointed position in at least a dozen states, and Utter said many of the office's duties could be divided between the State Revenue and Administrative Services Departments.

The $85,000-a-year state treasurer's post would be eliminated, he said, and maybe more jobs, too.

“It's probably not going to save big money,” Utter said. “But businesses have gotten very lean. There's no reason state government can't do that. We need to downsize.”

Figures, however, show a mixed bag in terms of savings in a couple of state agency reorganization efforts in recent years.

The Departments of Water Resources and Natural Resources were merged in 2000. In the three years leading up to the merger, the agencies' spending on salary and benefits rose by about 11 percent. During the three years after the merger, salary and benefits in the combined agency rose by 17 percent.

One of the biggest state reorganizations — merging the Departments of Social Services, Health and Public Institutions into the State Health and Human Services System in 1997 — led to the elimination of 300 mostly vacant jobs and saved $7.7 million, according to the Legislative Fiscal Office.

But state budget figures show that spending overall, including spending on personnel, kept rising in the new mega-agency, whose budget was over $1 billion a year.

Spending on salaries slowed only slightly after the merger, rising 11.4 percent from 1994 to 1997, and then rising only 10.2 percent from 1997 to 2000.

Former Lt. Gov. Kim Robak, who helped craft the HHS reorganization, said the larger goal of the merger was to eliminate infighting among agency heads, not to save money.

Mergers sometimes create agencies that are just too large to manage efficiently, said State Sen. Tony Fulton of Lincoln.

Fulton, who is an announced candidate for state treasurer, said that office is already doing “more with less” in terms of employees. Moving the office duties elsewhere might mean having the same number of workers doing the same jobs, just with different bosses, he said.

“It's not a silver bullet,” he said. “But if it can be shown that it saves money, you certainly have to look at that.”

State Sen. Brad Ashford of Omaha said he might introduce a bill to remove the Office of Juvenile Services from the Health and Human Services Department.

He said that having a separate state agency to deal with the treatment of troubled juveniles would bring a sharper focus to prevention and intervention efforts and that, he said, would save money in the long run.

State Sen. John Harms of Scottsbluff, a former community college administrator, said most mergers he saw in the education world didn't save money immediately but did in the long run, if the right leaders were in place.

One thing is certain, Harms said: With a projected $639 million budget gap looming in the 2011 and 2012 fiscal years, this year's special session was a relative “piece of cake.”

“The next time, you're not going to be talking about how much we take from each agency — it's whether we keep the agency,” he said.

Contact the writer:

402-473-9584, paul.hammel@owh.com

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