State Budget Crisis Task Force: Government Transparency & Accountability

“Public trust in government is near or at all-time lows.” The significance of that quote on public trust is that it introduces a section on “Accountability and Transparency in Budgeting and Financial Reporting” in the recently released State Budget Crisis Task Force report.

The task force took three years to explore the financial situation facing state and local governments. The overall picture, in the task force’s view, isn’t only not pretty, in many ways it’s downright bleak. That public confidence in government is abysmal probably isn’t a news flash. But how to turn that around? One way might be to follow the money and consider the task force’s recommendations for accountability and transparency.

Corruption and mismanagement in government are daily news stories that, while representing a small number of governments and agencies, nevertheless stick in the public mind. For example, there is the saga and scandal of Bell, California, a city of 35,000. The Los Angeles Times reported (before it was discovered and stopped) that the city manager was making $1.18 million a year; the city manager’s assistant made up to $564,000; and city council members (for part-time positions) were making more than $100,000.

Such stories motivate taxpayers everywhere to look suspiciously at their elected officials regardless of how ethical those officials might be. These are reasons the State Budget Crisis Task Force recommended a list of actions governments might use to ensure they’re operating in ways that foster public confidence. The fact that the task force recommends one way doesn’t mean that governments are doing it incorrectly or dishonestly because they’re doing it a different way. Good public officials who do their jobs ethically shouldn’t be undeservedly tarred because of the few who corrupt the system.

Having said that, here are the task force recommendations:

• Modified accrual budgeting by states and localities, essentially for reporting consistency.
• Multiyear financial plans for state governments to enable better planning and budgeting.
• Reserve funds for emergencies, for safety’s sake.
• Borrowed funds never treated as revenue, which can paint a false picture of a government’s financial health.
• Strengthened state oversight of local financial reporting and communicating prospects, to identify local government financial problems before they become crises.
• Budget standards, so there is no ambiguity and consistency exists about what the numbers are and what they mean.
• Easily understandable financial reports, which is self-explanatory.
• Implications for the federal government: “The federal government needs to be more cognizant of the effects its actions have on the fiscal condition of the states and localities.” You can almost hear cheering from state and local officials.
• Projections on the impact on state and local finances and services of federal actions and policies should be required. And the cheering gets even louder.
• Adequate disclosure of terms, conditions and risks of municipal finances. Once again, self-explanatory.

Public confidence in government is like having trust in another person: it’s hard to acquire and easy to lose. If these recommendations are helpful in enabling governments to earn the trust of their citizens, the task force will have provided a valuable service.

Related:  State Budget Crisis Task Force Releases Final Report