News - Bill's Blog

How much do state and local taxpayers pay lawyers and insurance brokers?

October 28, 2019

Last Friday, Robert Herguth and Tim Novak of the Chicago Sun-Times connected some dots about several of the Southwest Chicago suburbs whose government offices were recently “visited” by agents leading a federal investigation into Illinois corruption. The suburbs purchased insurance through an entity that employed the son of the Speaker of the House of Representatives of Illinois Michael Madigan.

There is an interesting accounting issue relating to this story.

When aggregating expenses on the state and local government version of an income statement (the “Statement of Activities”), you don’t see line items for things like insurance expenses, or legal fees. 

What you do see are expenses aggregated into warm, fuzzy, public-service mission categories like “Public Safety,” “Education,” and “Health and Human Services.” Government accounting standards subsume insurance and legal expenses under those categories. 

It would be nice to be able to compare jurisdictions on how much they pay for lawyers, and for insurance, and how those expenses trend over time. For example, to try to assess if they are overpaying for politically-connected services, or simply to get a handle on how many taxpayer dollars are getting gobbled up in those areas.

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