Ravitch, Glasgall Address State Legislatures’ Budget Officials
Volcker Alliance Director Richard Ravitch and State and Local Program Director William Glasgall spoke about budgetary challenges facing many governments at a National Council of State Legislatures Fiscal Directors conference following the NCSL’s annual meeting in Boston in August.
Mr. Ravitch, New York State’s former lieutenant governor and a key figure in New York City’s recovery from its 1975 financial crisis, told the meeting of about 75 legislative fiscal officers and analysts from across the country that states should shift from cash to accrual accounting for budgets, a practice that more clearly shows governments’ true obligations. New York City is the only major state or municipality that employs such a practice; it must “balance its operating budget according to generally accepted accounting principles (GAAP), which mandates that revenues in a given year must equal or exceed expenditures in the General Fund in that year,” according to city Comptroller Scott Stringer. Mr. Ravitch also suggested that states examine the possibility of employing a bankruptcy process to deal with unsustainable obligations.
Mr. Glasgall told the officials about the forthcoming planned release of the latest Truth and Integrity in State Budgeting report, based on a 50-state survey of budgets for fiscal 2015, 2016, and 2017. The report, which is scheduled for release in the fall, will show that even the most fiscally conservative states have room to improve in the areas of long-term revenue and expenditure forecasting; use of one-time revenues to pay for recurring costs; and transparency of budget information. Twenty percent of states, he noted, rank poorly in covering the cost of promised obligations for promised benefits for public employee pensions and retiree health care, while about a quarter of states suffer from weak financial reserve balances, in rainy day and general funds.
The NCSL meeting was supported by the Pew Charitable Trusts.