States Reach out to Bankers ... and Non-Bankers

Article excerpt

Budget pressures and challenges to federalism spotlight electronic commerce. Banks, if they're ready, could be natural providers

In the past, the states have asked for the help of the federal government--and in some cases rightly so," Governor Ben Nelson (D-Nebr.) told a gathering of state government chief financial officers recently. "But we have been delegating up for so long, we've developed an inability to control our own resources." Gov. Nelson was speaking at the 80th Annual Conference of the National Association of State Auditors, Comptrollers, and Treasurers (NASACT '95), held in Des Moines from Aug. 12 through 17.

The federal government has for years not only been telling states what to do, said Gov. Nelson, but also how to do it. This has taken away much of state government's discretion in legislative and executive action. Even worse, when the federal deficit grew, these mandates began arriving at state houses without enough money to help the agency heads with compliance.

Now, though unfunded mandates are supposed to end in 1996, Gov. Nelson warned state CFOs that restrictive block grants, telling states what they can't do with federal funds, can have the same net result: "We don't want the feds to balance their budget by busting yours!"

The regulation of power among federal, state, and local governments was announced by Gov. Nelson as the conference theme of a bipartisan Federalism Summit, planned for Cincinnati on Oct. 22 through 24. To be co-chaired by Governor Mike Leavitt (R-Utah), the summit will initiate a formal discussion of the effects of "federal devolution" among top officials of seven major governing organizations.

An important national issue, to be sure, but what does all this have to do with banking? Potentially a great deal. Anxious for help, CFOs at NASACT '95 agreed, raising a chorus of fears about heavier administrative and financial burdens that seem to be falling on their regional government agencies. Alert bankers, especially those sleuthing for new customers and services, found their opportunities multiplying rapidly at this and other fiscal officer meetings as the CFOs started evaluating programs once run by federal bureaus.

States latch onto electronic commerce

Another conference, which was held earlier in the summer, made even clearer the potential for banks to work more closely with states. At the 89th Annual Conference of the Government Finance Officers' Association (GFOA '95), held in Baltimore from June 11 through 14, the main topic for discussion among the 6,000 representatives, mainly from smaller jurisdictions, was their almost insatiable appetite for hi-tech financial services. Indeed, the announced GFOA '95 conference theme, "Performance," could easily have been subtitled, "Using Banks for Electronic Commerce."

Sessions at GFOA '95 which discussed the outsourcing of accounting and on-line treasury services or, best of all, electronic data interchange (EDI) and electronic benefits transfer (EBT), were the most heavily-attended. In particular, panels that focused on the Internet and privatization met in rooms which held about 500, with crowds spilling out into the hallway and attendees inside having to crane their necks to see around and through those forced to stand. And there was action as well as talk; staff of the Government Finance Officers' Association announced the opening of a GFOA home page on the Internet, with hypertext to FinanceNet, the web server created for government finance officers by the National Science Foundation in response to Vice-President Gore's Reinventing Government initiative.

"The Internet is achieving critical mass, so it's beginning to look like a worthwhile medium," said Preston Rich, executive director of FinanceNet. In less than a year of operation, FinanceNet has had three million "hits" on the Internet and has become the central clearinghouse for all federal assets being sold to the public. …