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Why is Truthful, Timely, and Transparent Financial Data Important? (Details)

September 20, 2015

TIA’s research determined that in sum, states have accumulated bills of almost $1.3 trillion in excess of assets available to pay those bills. Accumulating bills is in direct conflict with balancing a budget. Because of this, most states falsely claim a balanced budget. To avoid tough choices that would be unpopular amongst voters, elected officials hide the true cost of government. To increase their chances for re-election, accounting tricks have been used to alleviate the need to raise taxes or cut services and benefits.

To be informed participants in their governments, citizens must be provided with truthful and transparent information. States’ efforts to begin digging out from their current financial holes must start with honest government accounting. Only then can responsible alternatives to place the state on solid financial footing be developed and debated. An informed electorate is essential to a democratic system of government, and citizens have not received the financial information needed to be knowledgeable participants in their governments.

Responsible budgeting requires accurate and timely data. Truthful budgetary accounting must incorporate all current compensation costs, including the portion of retirement benefits employees earn every year. Accurate accounting requires all real and certain expenses be reported in the state’s budget and financial statements when incurred, not when paid.

  • Balanced budget claims have given citizens a false sense of security, while budgets are not truly balanced and states sink further into debt

  • Citizens have not reacted while state debt has increased because they have been led to believe everything is fine, because the budgets have been "balanced"

  • As a result, citizens do not understand the true cost of their state government

  • Complex pension schemes—that citizens and even elected officials—cannot understand are a big part of the problem

  • Voters have re-elected leaders based on false claims of balanced budgets, while in reality states have plummeted further into debt

  • Critical decisions have been made using financial data that is woefully inadequate.

  • Voters have chosen candidates

  • Citizens have advocated for spending and tax policies

  • Legislators have pushed for new programs and services without knowing the true cost of

    current and future spending

  • Taxpayers have not been asked to pay enough taxes to cover spending

Due to inaccurate accounting for pension and retiree health care benefits, compensation costs have been massively understated in state budgets. Over the years, budgets have been off-balance by almost $1.3 trillion. To balance budgets, elected officials would have had to cut spending and/ or raise taxes by almost $1.3 trillion.

Would voters have made different decisions if programs had been cut or taxes raised to reflect the real cost of government? Would elected officials have been re-elected if voters had received less state services and benefits and/or if taxes were raised to cover the costs?

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