In his budget address, Illinois Gov. Rod Blagojevich (D) cited many facts and figures. The problem is the budgets lack of transparency makes it impossible to verify his facts or figures.
The Institute for Truth in Accounting is calling for great transparency during the States budget process. We have talked to many legislators who have stated they have had to vote on previous budgets without knowing if the numbers in the budget are accurate. The governor is proposing major changes in the tax structure and massive increases in spending. Before the legislature must vote on these changes, they (and their constituents) need to be provided with a truthful accounting of how these changes will affect the States and its citizens finances. The Institute is asking for the governor to remove the budgets smoke and mirrors and replace it with verifiable calculations, including the costs of the additional spending proposed.
The Institute is also asking for a verifiable audit of the States financial condition. The States last financial statements (FY 2006) reported a negative financial position of $4.4 billion, but this did not include the liability for post-retirement health care benefits owed to State employees. The Civic Committee of the Commercial Club of Chicago has made an educated guess that the State is in debt by more than $100 billion. Before additional health care and education commitments are made, the Institute believes the public and legislators should know how much the State is truly in debt, including the liability for post-retirement health care benefits.
One dim light in the budget process is that, for the first time in years, the State comptroller released the States latest financial report (FY 2006) before the budget process began. This year, the financial report was issued March 1, some 10 months after the June 30, 2006, fiscal year ended. Last year, it took a full year to issue this report, well after the budget process was complete. The Institute believes the State comptroller should issue the financial statements on a timely basis, like corporations are required to do, not nine to 12 months after the fiscal year ends.
The Institute is also requesting the governor outline how his previous budgets have been balanced, yet they have decreased the States financial condition. Our research indicates that by the time Gov. Blagojevich took office, his predecessors had balanced the budget each year, but accumulated a $40 billion financial hole. During his first three years, the governor proposed and the legislature passed balanced budgets. The Institute understands that a balanced budget means that all revenues the State takes in are equal to all expenses the State incurs. Therefore, if balanced budgets were passed, then the States financial hole should have remained the same $40 billion. But the States audited financial statements indicated three balanced budgets increased the financial hole by more than $4.5 billion to $44.5 billion.
Because in Illinois a balanced budget does not mean a zero deficit, the Institute is asking the State comptroller to calculate and announce to the public and legislators an estimate of the deficit that he will report in the financial statements, if the governors proposed balanced budget is enacted.
The Institute for Truth in Accounting is working to enhance the credibility of public and private sector financial reporting by encouraging the issuance of understandable, reliable and relevant information. Founded in 2002, and based in Northbrook, Ill., the Institutes initial focus was on the federal government and recently expanded its efforts to Illinois state government. The Institute for Truth in Accounting is a nonprofit organization with no political affiliations.
Sheila A. Weinberg is founder & CEO of The Institute for Truth in Accounting.
from the April 11-17, 2007, issue