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Evaluating the accessibility to the public of states’ budget practices and outcomes

States should provide the data that public officials and citizens need to understand budgets. This includes online disclosure of budgetary information; public reporting of the scope and cost of tax expenditures, such as exemptions, credits, and abatements; and reporting of the cost of deferred infrastructure maintenance.

States must disclose more than revenues and expenditures for policymakers, advocates, and citizens to understand the risks to fiscal stability that states may face in years to come. Consolidated websites containing an array of disclosures are perhaps the most important way a state can offer a full range of data necessary to interpret budgets. 

Tax expenditures are often used to attract new businesses or exempt items such as food or clothing from state levies, however these tax exemptions, abatements, or credits may deprive a state of revenue that may be needed currently or in the future. States should comprehensively disclose the nature and estimated value of tax expenditures in budgets or related documents.

Disclosing deferred costs of maintaining infrastructure such as roads, bridges, and buildings is another significant transparency issue. While every state provides tables to show how much has been borrowed, often for infrastructure projects, only a handful of states provide data on accumulated deferred maintenance costs. It is also critical that states provide tables listing outstanding debt, debt service costs, and information on any legal debt limits.

Standard-setting bodies should work with associations of states to develop rules for the creation of concise, timely and readable financial reports. The convoluted, sprawling nature of state financial statements make them of limited use for all but individuals with extensive training. Both budgetary and asset-based information for all special funds should be easily accessible. Such data should be used in disclosure statements for borrowing in the same format.

States should explain fully to the public how they project, develop, and balance budgets. Without such transparency, citizens are far less able to hold public officials accountable.

Transparency Best Practice Indicators