Financial watchdog gives WA, Inslee ‘D’ in financial preparation for COVID
A new report out from financial watchdog group Truth in Accounting argues that Washington state was financially unprepared for a crisis like COVID, and any other type of crisis. The report awarded the state and Governor Inslee a shiny D grade for their lack of preparedness and balancing the budget. Truth in Accounting CEO and founder Sheila Weinberg joined the Jason Rantz Show on KTTH to discuss.
“We determined that each taxpayer’s burden, which is each taxpayer’s share of the state’s debt, is $6,100. The state’s debt as we calculated is $17.2 billion. And so that’s why we gave the state a D grade,” she said.
How are these numbers calculated?
“What we do is we go to the state’s audited financial statements,” Weinberg explained. “We don’t do their budgets because we consider those just political math. Those are almost impossible to analyze … We look at the assets that the state reports and the bills, including unfunded pensions and their unfunded retiree health care liabilities, and compare the assets that the state has available to those bills that they have accumulated to date.”
Does that mean that the average person in the state will end up having to pay an additional $6,100?
“It’s a per taxpayer number, not a per person. It’s approximately per household. Indeed, this represents future taxes that somebody will have to pay, and they won’t receive any government services or benefits for those taxes because that money was already spent in the past, and they’re just paying for the bills that have been accumulated so far,” she said.
“It will be either the taxpayers throughout the country — I’m including people in Washington — or people in Washington individually if Congress doesn’t decide to give additional money to the States,” she added.
Weinberg says bad accounting and balancing of the budget should be taken into account when money is being given to states.
“We say if they’re going to give money to the states, then let’s put some conditions on it. And the major one condition would be you have a balanced budget requirement,” she said. “You need to use good accounting and go ahead and truly balance your budget instead of accumulating $17.2 billion of debt.”
“Instead of in the past living within their means … they used accounting gimmicks to either inflate their revenue or to deflate their expenses, for example, compensation costs,” she added. “They used pensions to defer some of that instead of paying and funding that as they went along.”
That said, a crisis like COVID is hard to anticipate, so what planning should have been done to anticipate some kind of crisis like this? Weinberg says that keeping a balanced budget is a prime part.
“When the great recession happened, that was something we didn’t expect. And then there’s the dot com bubble. There seems to be, unfortunately, a crisis every about seven years and states, at a minimum, should be living up to their balanced budget requirements,” she said.
“Why does the state have a balanced budget requirement? So they don’t go into debt, so they can be prepared when a crisis happens, and so that the taxpayers can hold their elected officials accountable for their spending.”
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