I hope you are doing well. Thank you for your service to our city.
As a constituent, I am concerned with the finances of our city and wanted you to be aware of a few little-known accounting facts that I have learned from the non-partisan group Truth in Accounting.
First, the government uses different accounting standards than the business community and has two and sometimes three different sets of books.
Second, the budget is completed using cash-basis accounting which is flawed because it makes money fungible and can list borrowed money as revenue while skipping pension payments and bills to ensure it appears balanced.
Truth in Accounting produces annual reports based on the financial analysis of all 50 states, the federal government, and the 75 most populated cities. These reports are not meant to point fingers at any political party or policy. The reports reflect the numbers that would be in the budget if government accounting standards were the same as required by the business community. In technical terms, full accrual accounting, not the cash-basis currently being used.
Along with Truth in Accounting, I believe elected officials have been given a raw deal by the groups that set the accounting standards. Truth in Accounting has been lobbying them for years to change the standards.
Suppose elected officials and citizens understood the difference in accounting standards. We all could insist on using full accrual accounting in the budgets and, therefore, more effectively be informed about tax increases, program cuts, or both.
Truth in Accounting makes no policy prescriptions past better accounting practices, so elected officials can serve their constituents from a place of complete honesty. Understanding these accounting concepts can help build a bridge between political parties. The fiscal facts can help guide you in your decision-making and the desired outcome of why you wanted to serve in the first place.
We know that you are in a tough spot as an elected official. So Truth in Accounting is here to help right the ship. Please let me know if you would like to be connected with them to learn more. They often give presentations to citizen advisory boards, city councils and testify before state legislators and Congress.
And please take time to review our city's annual comprehensive financial report to understand the complete financial picture of the place we both call home.
Thank you for your time and your service.