LETTER TO THE EDITOR: Truthful accounting is key

Mike Pfaff  |  March 22, 2022

"Truth in Accounting (TIA) is an American think tank organization that promotes traditional fiscal values. Its goal is to educate and empower citizens with understandable, reliable, and transparent government financial information—basically, a government finance watchdog group.

Founded in 2002, TIA believes truthful accounting is the key for citizens, legislators, and the press to understand the truth about government finances. TIA encourages public entities to produce financial reports that are comprehensive, clear, transparent, and truthful.

In September 2021, TIA published reports on each state’s financial health. They provide many statistics in their information, including taxpayer burden, which is assets minus liabilities (money available to pay bills).

If a state doesn’t have enough money to pay their bills, they are considered a “sinkhole” state (they owe more than they own). TIA also assigns a letter grade based on the amount of taxpayer surplus or burden (money the state could give back to taxpayers or demand from taxpayers to keep the state from borrowing money).

The 2021 report shows three states receiving an “A,” eight states receiving a “B,” fourteen states receiving a “C,” sixteen states receiving a “D,” and nine states receiving an “F.”

The three “A” states are run by a Republican governor, while a Democratic governor runs the nine “F” states.

Six of the “B” states are run by Republican governors, while the “D” category is split evenly, with eight each run by Republicans and Democrats.

Now we get to the “C” states, including North Carolina - nine Republican governors and five Democratic governors.

North Carolina is considered a sinkhole state that owes more than it owns and has a taxpayer burden of minus $1,400. NC has $42 billion of assets available to pay bills totaling $46.3 billion. In other words, we don’t have enough money to pay our bills.

The eleven states with “A” and “B” rankings show a surplus of money. NC is not one of them. TIA’s director of research, Bill Berman, told the Carolina Journal, “It’s almost a success story, as much as you can find one in state and local governments,” and gave NC faint praise.

Suppose you’re curious about the three states that earned a financial grade of “A,” Alaska, North Dakota, and Wyoming. I won’t list all of the nine states that receive an “F” grade, but California and New York lead them, as you probably already know. CA would have to get $21,100 from each taxpayer to balance the budget.

According to John Hood, president of John Pope Foundation, board member of the John Locke Foundation, and syndicated columnist, NC government jobs are top-heavy. They could/should be shrunk to improve the state's financial health.

TIA also tracks, by population, the largest cities in each state as to their financial health. North Carolina’s major cities are reasonably good financially, except for Greensboro. The city manager, council members, and mayor are responsible for the city's budget and are dominated by democrats.

Andrew Berger-Gross, Senior Economist and Economic Analysis Division, NC Department of Commerce, said, “We, of course, have a robust and thriving tourism sector, but our economy isn’t entirely dependent on it.” “We are urbanizing, but compared to many other states, we are still predominantly a rural state. “ After (COVID) recession, North Carolina is well poised to bounce back compared to a lot of other states.”

TIA also reported its financial transparency scores, and NC tied with Georgia for the second-lowest score among fifty states, mainly because of its lack of external auditors. Its own audit included misleading and confusing deferred items.

North Carolina has run up less taxpayer debt than most states. Ranked 14th in the US in fiscal health, our state finds itself in better shape than most other states. We had made significant improvements since 2010 when Veto Purdue was governor and one of the few politicians in the country with lower poll numbers than Biden."

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