Nonprofit takes issue with state, local government budget reporting
(The Center Square) – A nonpartisan think tank is taking issue with the way state and local governments present their budgets.
The Illinois-based Truth in Accounting is opposed to governments using cash-based accounting, so budgets that appear balanced are anything but.
With cash-based accounting, financial reports show expenses only when money is paid, not when debt or future expenses are incurred. The organization is demanding that state and local governments institute full accrual calculations and techniques, or FACT-based accounting.
CEO and founder Sheila Weinberg said borrowing money is not a way to reduce a deficit.
“The Illinois comptroller issued the 2019 financial report and her headline was that the General Fund deficit decreased by $6.8 billion dollars, but if you look they borrowed $6 billion dollars,” Weinberg said.
The organization is taking issue with the Governmental Accounting Standards Board, which is trying to keep this way of accounting. Truth in Accounting said this type of reporting supports bad government budgeting practices like counting borrowing proceeds as revenue, and underfunding pension funding requirements in order to balance budgets.
Illinois was wrestling with budget shortfalls long before the COVID-19 pandemic struck, leaving it at risk of becoming the first state to be stripped of its investment-grade rating. That is largely due to an unfunded pension liability of around $141 billion.
Weinberg is fearful the budget charade has an impact on election day.
“I think it has a current negative effect on the public and the voters because they are voting based upon these false statements like ‘we have a surplus’ and ‘we have reserves’,” said Weinberg.
Weinberg said Truth in Accounting is mobilizing experts, advocacy organizations, watchdog groups, journalists and everyday citizens to demand that state and local governments make changes in budgeting practices.
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