To assist in addressing the difficulty in the state budget process, the Institute for Truth in Accounting (IFTA) is calling for greater transparency in the budget calculations. Noted the IFTAs CEO Sheila Weinberg, This mess has been building for years. Lack of transparency in the budget process makes it very difficult for the parties to have honest negotiations.
The IFTAs research has identified several items that make the budget calculations confusing. These include the underestimation of the cost of government programs, including Medicaid, and the fact that revenue amounts include money borrowed. The actuarially-determined cost of the retirement benefits earned and promised to state employees and teachers is not used in the calculation. To explain the budget calculations, the IFTA has issued an educational booklet titled The Illinois Grande Illusion, which can be found on its Web site at truthinaccounting.org.
Weinberg points out that the Illinois constitution requires the governor and legislature to pass a balanced budget. This requirement is designed to give the public control over the state budget process and to hold elected officials accountable. The intent of the balanced budget requirement is to eliminate the legislators and governors ability to provide current voters government benefits and services, while passing the bill on to future taxpayers.
For more than 20 years, Illinois governors and legislatures have used what Weinberg calls political math to circumvent the balanced budget requirement. She highlights that each year the politicians have proudly claimed they have balanced the budget, yet the state is more than $44 billion in debt. According to the last financial statements issued by Comptroller Daniel Hynes office, the 2006 balanced budget resulted in a deficit of $769 million.
To gain back control of the chaotic budget process, Weinberg says that the public needs to ask questions of the governor and legislators. These questions include the following: Will they consider the budget balanced even if they have to borrow money to pay current bills? Will the state agencies continue to hide their bills, so they are not included in this years budget? Will the budget be balanced by underfunding pensions? Where will the money come from to pay for new programs and benefits, when the state is already more than $44 billion in debt? How much further in debt will the state be once a balanced budget is passed? And, when the governor and legislators finally come to an agreement and hold a press conference to proudly declare success, will it be the truth when they say that they have passed a balanced budget?
The recent corporate accounting scandals highlight the importance of telling the public the truth about corporations financial positions, warns Weinberg. Lack of transparency resulted in thousands of stockholders and workers losing millions of dollars. We need an honest and clear state budget process, because billions of dollars and the livelihood of millions of citizens are at stake.
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.
from the July 18-24, 2007, issue