Smoke and Mirror-Style Accounting in Madison
Lasee’s Notes
Happy New Year to you and your family.
If you lived in the state of Wisconsin during the 2006 election cycle, chances are you saw an ad with Governor Doyle telling you how he eliminated Wisconsin’s $3.2 million dollar budget deficit. Touting his fiscally conservative credentials helped get the Governor re-elected.
What if it turned out that the Governor was using accounting tricks to eliminate the deficit? Would the voters still be so eager to put him back in office for another four years? He isn’t the first governor to add to our budget deficit while claiming there is no budget deficit.
It turns out that the Governor is using the state’s way of balancing the books to make his deficit-cutting claim. If he used the same accounting principles businesses are required to use, Wisconsin would have a $2.15 billion general fund deficit.
Newly released financial statements show the state of Wisconsin closed its 2005-06 fiscal year with a $2.15 billion general fund deficit, according to the Wisconsin Taxpayers Alliance (WISTAX). This is $8 million more than in 2004-05 and $231 million more than in 2003-04. That $2.15 billion deficit was 12.6% of the $17 billion in general fund spending officially reported for fiscal year 2005-06.
The Comprehensive Annual Financial Report (CAFR) was released in December. Unlike state budgets enacted by the Governor and Legislature, the CAFR follows generally accepted accounting principles (GAAP) prescribed by the nation’s Governmental Accounting Standards Board.
GAAP is required of all publicly-traded companies. All certified accountants must use GAAP. The federal government requires it for its internal auditing and most states and local government entities are moving towards GAAP. What about Wisconsin? Why does the budget not reflect the actual state of our financial health according to the principles that any CPA would use if they were doing our books?
If a private company cooked their books the way that the State of Wisconsin does, someone would be in jail.
A more responsible approach is using GAAP for all state accounting. This is one of my legislative priorities and I will be introducing a bill to require GAAP standards for state government over the next five budget cycles. We should eat this 2.15 billion dollar elephant one biennial budget at a time ($430 million in each budget cycle). It would be great if this was included in the budget being proposed by the Governor next month. But with the state agencies asking for increases in spending and the Governor is proposing new taxpayer-funded health care programs (when we are not funding the existing programs as well as we should), it seems unlikely that the Governor will be leading the charge for more responsible budgeting. After all, who is demanding a change?
Why do the Governor and the Legislature cook the state’s books to spend more and do more than they are willing to tax all of us for? Because your state government can and it has made some well-liked.
Until we get a clearer picture of Wisconsin’s financial health, taxpayers will never know whether to believe their elected officials when they throw around claims to have balanced budgets and eliminated deficits. When there is only one set of books, taxpayers will be able to elect leaders who cannot hide their own overspending with creative accounting.
-------------------------------------------------------------------------------------
Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.
Happy New Year to you and your family.
If you lived in the state of Wisconsin during the 2006 election cycle, chances are you saw an ad with Governor Doyle telling you how he eliminated Wisconsin’s $3.2 million dollar budget deficit. Touting his fiscally conservative credentials helped get the Governor re-elected.
What if it turned out that the Governor was using accounting tricks to eliminate the deficit? Would the voters still be so eager to put him back in office for another four years? He isn’t the first governor to add to our budget deficit while claiming there is no budget deficit.
It turns out that the Governor is using the state’s way of balancing the books to make his deficit-cutting claim. If he used the same accounting principles businesses are required to use, Wisconsin would have a $2.15 billion general fund deficit.
Newly released financial statements show the state of Wisconsin closed its 2005-06 fiscal year with a $2.15 billion general fund deficit, according to the Wisconsin Taxpayers Alliance (WISTAX). This is $8 million more than in 2004-05 and $231 million more than in 2003-04. That $2.15 billion deficit was 12.6% of the $17 billion in general fund spending officially reported for fiscal year 2005-06.
The Comprehensive Annual Financial Report (CAFR) was released in December. Unlike state budgets enacted by the Governor and Legislature, the CAFR follows generally accepted accounting principles (GAAP) prescribed by the nation’s Governmental Accounting Standards Board.
GAAP is required of all publicly-traded companies. All certified accountants must use GAAP. The federal government requires it for its internal auditing and most states and local government entities are moving towards GAAP. What about Wisconsin? Why does the budget not reflect the actual state of our financial health according to the principles that any CPA would use if they were doing our books?
If a private company cooked their books the way that the State of Wisconsin does, someone would be in jail.
A more responsible approach is using GAAP for all state accounting. This is one of my legislative priorities and I will be introducing a bill to require GAAP standards for state government over the next five budget cycles. We should eat this 2.15 billion dollar elephant one biennial budget at a time ($430 million in each budget cycle). It would be great if this was included in the budget being proposed by the Governor next month. But with the state agencies asking for increases in spending and the Governor is proposing new taxpayer-funded health care programs (when we are not funding the existing programs as well as we should), it seems unlikely that the Governor will be leading the charge for more responsible budgeting. After all, who is demanding a change?
Why do the Governor and the Legislature cook the state’s books to spend more and do more than they are willing to tax all of us for? Because your state government can and it has made some well-liked.
Until we get a clearer picture of Wisconsin’s financial health, taxpayers will never know whether to believe their elected officials when they throw around claims to have balanced budgets and eliminated deficits. When there is only one set of books, taxpayers will be able to elect leaders who cannot hide their own overspending with creative accounting.
-------------------------------------------------------------------------------------
Lasee’s Notes is a weekly column by Representative Frank Lasee, 2nd Assembly District, covering events in the Legislature and statewide.
posted by John Q Cheesehead | 10:10 AM
0 Comments:
Post a Comment
<< Home