Finally, a comparability study for taxpayers

Wednesday, March 25, 2009

Comparability studies always seem to be a part of the mix when local entities are deciding how much to pay teachers, administrators or other executives.

We're often amazed at some of the salaries these entities find it necessary to pay in order to hire qualified personnel, especially the taxpayer-supported entities.

The fiscally conservative think-tank, the Platte Institute for Economic Research, turned the tables recently, hiring Creighton University economics professor Dr. Ernie Goss to do a comparability study of neighboring states' expenditures, compared with Nebraska's.

In 2007, state and local governments in Nebraska had adjusted their spending to match that of neighboring states, the overall savings would have been $1.97 billion, or $1,110 per capita. In addition, if state and local governments had adjusted their spending to match the U.S. average, overall savings would have been $931 million or $525 per capita.

In the five key areas of higher education, K-12 education, public welfare, highways and public safety, if Nebraska matched its neighboring states, it would have spent $557 million less, or $314 less per capita.

The Platte Institute makes some interesting points as to what someone could do with $557 million.

The ideas:

* Buy Twitter (Facebook reportedly offered to buy Twitter for $500 million at the end of 2008).

* Buy an annual pass to Walt Disney World for every child under the age of 18 in Nebraska for the next two years.

* Purchase 92 minutes of TV advertising on the Super Bowl.

* Give every fan in Memorial Stadium for a sold-out Husker game a check for $6,500.

* Pay a full year of tuition, room and board at Harvard University for half of all high school seniors in Nebraska.

* Lay 557 million one-dollar bills end to end around Earth twice at the equator.

What to do?

The study recommends Nebraska limit growth in government spending to the rate of inflation plus the rate of population growth until Nebraska's spending as a share of gross state product matches that of its neighbors. After that, spending should match the growth in personal income.

Other recommendations:

* Adopt the "Where the Money Goes" system used by Texas so citizens can better determine the effectiveness of government spending.

* Establish task forces to find opportunities to privatize things like recreation facilities, youth recreation leagues, music, theater, sports venues and park lodges. (McCook already fits that model to an extent.)

* Consider creating toll roads.

* Hold future growth of homestead exemptions to the rate of inflation plus population growth.

* Hold growth in state aid to K-12 education to the rate of inflation to the rate of growth of the K-12 student population in the state.

Nebraska is a great place to live, and most of us justify our tax rates by the smaller population which must bear the tax burden. That argument doesn't ring true when applied to Wyoming and South Dakota, however. And, it's an eye-opener when Nebraska's tax rates are compared to the U.S. rates.

Judging from Dr. Ernie Goss' study, the Cornhusker state has a long way to go.

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