The Lincoln Independent Business Association (liba.org) reviewed the City of Lincoln’s audited financial statements going back the last 10 years. That review has led us to believe that the City of Lincoln’s General Fund budgeting process is broken and deserves a much closer examination – with the explicit objective being transparency with the taxpayers.
In every single year of our review – a) actual revenues exceeded budgeted revenues, b) actual expenditures came in below budget, and c) annual surpluses were generated resulting in unrestricted cash balances increased substantially.
This is not a one-year issue. It is a clear consistent pattern which has become increasingly disconnected from actual financial outcomes.
LIBA recognizes that the Lincoln City Charter requires the City to budget only 90 percent of the property tax revenue it expects to receive. That provision naturally creates some positive revenue variance and serves as a prudent safeguard against future revenue shortfalls. However, that charter requirement explains only a portion of the variance observed between budgeted and actual financial results.
For ten consecutive years, not one time did actual General Fund revenues exceed budgeted revenues. The average excess revenue over budgeted of approximately $17 million per year over the last five years.
At the same time, General Fund expenditures over those 10 years came in below budget every single year – on average – $40 million per year over the last five years.
That equates to average annual surpluses of more than $57 million per year over the last 5 years – an increase of 4.1X the $16 million average over the previous 5 years.
In simple terms – over the last five years the City did not spend more than 20% of expenditures that were presented in the city budget. That’s a 222% increase over the previous five years.
The result is significant increases in unrestricted general fund cash balances – on average $151 million over the last five years – a 250% or 2.5 x increase from $59 million for the previous five years.
The issue is not simply that surpluses exist. The issue is what happens after those surpluses are generated, and at what point does “conservative forecasting” become systematic underestimation?
Which is a legitimate public policy question.
There are two important factors that every taxpayer needs to understand:
1) The Assessor is required to set the levy at an amount that will bring in sufficient revenue to cover budgeted expenditures. Accordingly, even if an expenditure is not expected to occur – or doesn’t occur, the assessor is required by law to ensure that the funds to pay for those expenditures are collected via the assessed levy, and
2) If those budgeted expenditures don’t occur, the City Council retains the authority to spend those funds in a future period, and with a simple majority vote of the council can – and does re-direct those expenditures to wherever they choose.
To put all of this in perspective, the unrestricted general fund cash at the end of 2025 was equal to nearly an entire year of general fund operating expenditures. Frustrating to most taxpayers – year over year, City Hall emphasizes “we didn’t raise taxes”. Which to most people implies an equivalent statement that “we didn’t take more of your money”. LIBA believes that argument is not only disingenuous, it’s extremely misleading to taxpayers.
What City Hall is really saying is “we didn’t increase the levy”. The truth though is the taxes collected by the city from taxpayers DID in fact increase, as a result of increased property values.
Given the size of existing reserves, taxpayers should reasonably ask whether current reserve levels remain appropriate and whether opportunities exist to reduce future tax burdens.
Which resurfaces the question of how the downtown library was financed. LIBA raised this question in 2025, but this analysis highlights the need to revisit that funding decision.
At the time, LIBA asked – why did the City choose to issue approximately $23 million in debt for the new downtown library when available unrestricted cash balances and annual surplus capacity appeared sufficient to fund the project directly?
LIBA is not asserting that borrowing is never appropriate.
However, taxpayers deserve a clear explanation of why debt was issued for a $23 million project while the City simultaneously maintains historically high unrestricted general fund cash balances and continues to generate substantial annual surpluses.
Transparency matters.
What factors led decision-makers to commit taxpayers to repaying bonds and associated interest costs?
What specific financial analysis demonstrated that issuing $23 million in debt produced a better outcome for taxpayers than using available cash reserves, reserve balances above policy targets or a combination of cash and financing?
The City’s increase in net position, the governmental equivalent of retained earnings, has unsurprisingly also accelerated significantly. Total growth in net position over the last five years was $1.05 billion – more than 2x the growth over the previous five years.
LIBA’s Position
LIBA is not opposed to prudent reserves, conservative budgeting, or responsible financial management. What concerns our members is the consistent patterns that appear throughout the audited financial data – and the abject lack of transparency over those figures.
The question is no longer whether these patterns exist. The audited financial statements demonstrate that they do.
The more important question is why these patterns exist and whether adjustments to the budgeting process could improve transparency, accountability and public understanding.
Transparency requires more than publishing audited financial statements. When year after year actual revenues exceed budgets, actual spending falls well below budget, and unrestricted cash balances continue to grow, taxpayers are entitled to ask whether budgets should be more closely aligned with actual financial outcomes.
LIBA believes taxpayers deserve greater transparency regarding how surplus funds are accumulated, how they are prioritized and how they are ultimately spent.