Beyond the Basics: Best Practices in State Budget Transparency
The following working paper was released at an event hosted by the Volcker Alliance, the University of Illinois Institute of Government and Public Affairs (IGPA) and the Federal Reserve Bank of Chicago on Monday, December 7, 2015 at the Union League Club of Chicago. The paper explains the basic principles of sound budgeting and provides recommendations for improving budgetary transparency, based on a review of literature and interviews with numerous current and former state budget directors, finance officials, and public administration professors specializing in state and local government budgeting. The principles and recommendations build on a set of recommendations made in a Volcker Alliance report, Truth and Integrity in State Budgeting: Lessons from Three States, which focused on the fiscal practices of California, New Jersey, and Virginia.
While many US states have tried to encourage transparency in their annual or biennial budgets, all fifty still lack a full range of disclosures about the use of one-time revenue to cover recurring expenditures, the deferral of spending, and the underfunding of infrastructure maintenance and retirement obligations for public workers. This lack hinders debate over spending priorities and encourages the use of budget gimmicks that can lead to poorly informed policymaking.
The recommendations in this working paper will be used to inform the Volcker Alliance’s further scrutiny of state budgets and budget practices in all fifty states.