Tag: Truth in Accounting

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Accountability

Sinkhole States

Truth in Accounting, states, debt,

What do citizens lack most at all levels of government? Truth in accounting. 

So Sheila Weinberg really has her work cut out. This very morning, her Chicago-​based research-​tank called, not coincidentally, Truth in Accounting released its annual Financial State of the States report. The new data shows that “the total debt among the 50 states decreased by $62.6 billion in FY 2018 due to a prosperous economy.”

But that’s where the good news ends. “Every state, except for Vermont, has balanced budget requirements,” notes the report, “yet even with these rules in place, states have accumulated more than $1.5 trillion in debt.”

Almost entirely from unfunded pension and employee benefit liabilities. 

“At the end of the fiscal year (FY) 2018, 40 states did not have enough money to pay all of their bills. This means that to balance the budget … elected officials have not included the true costs of the government in their budget calculations and have pushed costs onto future taxpayers.”

Put another way: Your government is lying to you.

One interesting feature of the analysis is its top five “Sunshine States” —

  1. Alaska
  2. North Dakota
  3. Wyoming 
  4. Utah
  5. Idaho 

— and its bottom five “Sinkhole States” — 

  1. Hawaii
  2. Massachusetts
  3. Connecticut
  4. Illinois
  5. New Jersey

Fun fact: It just so happens that all five of the top states have a statewide process of voter initiative and referendum, while none of the “sinkhole states” have this democratic check. 

The new online State Data Lab has the skinny on every state. Compare your state against the rest. 

Be brave.

This is Common Sense. I’m Paul Jacob.

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Truth in Accounting, states, debt,

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Accountability general freedom government transparency incumbents initiative, referendum, and recall local leaders political challengers

Initiative Surplus?

Truth in Accounting, TIA, Financial State of the States, Sheila Weinberg, initiative, democracy

Only nine out of 50 states can pay their bills and meet their obligations; 41 cannot, barring major tax increases or spending cuts.

That’s what we learn in last month’s “Financial State of the States” report from Truth in Accounting (TIA).

Alaska is in the best shape, “with $11 billion in assets to pay future bills”; New Jersey’s in the worst, needing “to come up with $208 billion in order to meet its promised obligations.”

Sheila Weinberg, TIA’s founder, works hard to counter governments’ creative accounting. It’s trickery, really, which “would be considered criminal for private sector corporations.” One gimmick is “promising to pay employee benefits in the future, but not fully funding the benefits programs as they rack up obligations.”* 

Thankfully, TIA’s financial analysis includes items such as already-​made pension and healthcare commitments. 

Now, let’s expand the analysis, collating these findings to separate between initiative and non-​initiative states**:

  • Seven of the nine states with a “taxpayer surplus” — where government can pay its bills and meet its obligations — have the ballot initiative process. 
  • The 23 initiative states comprise 46 percent of the states. Yet, initiative states comprise a whopping 78 percent of financially healthy states. 
  • Of the 20 states carrying a larger-​than-​average taxpayer burden, 15 states (75 percent) lack the initiative process.

Granted, this represents a correlation between states with citizen-​initiated ballot measures and healthier fiscal policy, not necessarily causation. Still, I’m not surprised states where citizens have more say so are better governed.

This is Common Sense. I’m Paul Jacob.

 

* “This short term fix allows governments to artificially ‘balance their budgets’ by not counting certain obligations as official debt.”

** There are 23 initiative states and 27 non-​initiative states. Two referendum-​only states— Maryland and New Mexico — are considered non-​initiative states, and so is Illinois. Illinois is considered a non-​initiative state, because its ballot initiative process is so severely restricted as to be non-​existent. Only one measure has ever appeared on the ballot. 

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