State Budget Gimmicks

January 29, 2014

States use budget gimmicks to hide the true cost of government spending, says State Budget Solutions.

Researchers examined 2013 budgets for the 50 states and found some of the best "tricks" used by legislators to hide actual costs. Some of the most popular include underfunding pensions, inflating revenue projections, shifting funds and using one-time asset sales.

  • California has a "surplus" due solely to budget gimmicks that ignore the state's debt. The state is not making required payments into its pension fund in order to claim to have a balanced budget.
  • Moving money from one fund to another is a common tool. Texas has collected money for its 911 emergency system but is not spending it. By not spending the money but still counting it toward the budget, the budget appears more balanced.
  • Connecticut's governor has a plan to borrow $10 million to pay this year's installment in a $100 million, 10-year stem cell initiative. The $10 million that it "saves" from borrowing will then be deposited into the state's general fund toward the state's deficit.

States have learned ways to mask spending and create what looks like a balanced budget. By selling assets, for example, a budget cap may close for that year, but state expenditures continue -- resulting only in larger deficits. Similarly, lawmakers routinely make unjustified assumptions that lead to higher projected revenues and savings. And reallocating funds from one agency to another is often advertised as a spending cut, when it is actually just a shifting of funds.

Source: Joe Luppino-Esposito, "The Worst State Budget Gimmicks of 2013," State Budget Solutions, January 3, 2014.

 

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