Transparency

In a 4/29/09 WSJ op-ed, two senior research fellows at George Mason U., Veronique de Rugy and Eileen Norcross, make a case for the Federal Government to adopt a policy of true transparency. This would involve “putting specific details of every government expenditure online”.

Several states already so this, enabling the public to become watchdogs. The authors cite the example of the Missouri Accountability Portal (MAP) which posts all state expenditures. When the National Taxpayer’s Union “discovered more than $2.4 million spent for questionable purposes over the past eight years”, the Republican governor Matt Blunt asked for an audit.

The authors note that the Federal effort at Transparency, Recovery.gov, “only requires states and cities to disclose project-level expenses,” leaving the details out. While the authors want the Federal web site to list detailed expenses, I think that that is more appropriately a state function.

Missouri’s web page (link above) only says that stimulus expenditures are “coming soon” and we can only hope that they will offer the same kind of openness in revealing the details of stimulus spending. A big huzzah for Guv Blunt and the folks at Missouri’s state offices. Let’s encourage our states to follow their example.

In a 50 state survey the non-partisan Institute for Truth in Accounting found that “the same accounting rules are not being used for budget calculations as for financial reporting. Second, Comprehensive Annual Financial Reports (CAFR) are not being issued in time for legislators or governors to review the results meaningfully before planning the next year’s budget.”

States with billion dollar budgets are using the same “cash basis” accounting method that a very small business uses. States disregard liabilities for payments in future years in crafting their current year budgets. “All [legislators] have to focus on is expected cash flow in the coming fiscal year, and they can ignore amounts that will be paid in future years.”

If you reside in California or Illinois, skip this next part. It’s ugly. “California’s budget calculations included no estimate of revenues. Only estimated expenses are noted.” “The Illinois budget .. shows an ever-expanding hole between what was budgeted and what actually transpired during that fiscal year.”

Yay for Vermont, which “is carrying a positive net operating balance, and its budget tracks its CAFR comparatively well. Informed with such information, Vermont taxpayers, legislators, and media have a truer depiction of the state’s financial condition.”

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