Media
How to Discourage Accounting Gimmicks in the Budget
The Rendell administration celebrated the end of the tax amnesty program bringing in $261 million, well above projected revenues. But Capitolwire (subscription only) reminds us the Governor was originally opposed to tax amnesty program based on the Department of Revenue’s dismal revenue projections of $63.4 million, below the PA Senate projections.
The incident demonstrates the value of an Independent Fiscal Office. An IFO would function much like the Congressional Budget Office, where revenue projections and costs would be computed by a independent office.
Of course numbers can still be manipulated – like the cost of the federal health care bill based on faulty assumptions from Congress. But on the whole – as our PolicyPoints on state spending transparency explain – it’s likely to produce more accurate revenue projections and a host of other budget services.
Why is this important? Let’s refresh our memories with the shortfall from estimate during the past two budget cycles:
| Historical General Fund Budget Shortfalls: Projected vs. Actual Revenues (Monthly) | ||||||
| (in millions of dollars) | ||||||
| 2008-09 | 2009-10 | |||||
| Actual | Difference | Percent | Actual | Difference | Percent | |
| July | $1,746.20 | ($0.08) | 0.00% | $1,650.89 | ($2.11) | -0.13% |
| August | $1,668.90 | ($117.50) | -6.58% | $1,605.50 | ($19.90) | -1.22% |
| September | $2,343.70 | ($163.80) | -6.53% | $2,050.36 | ($118.64) | -5.47% |
| October* | $1,649.00 | ($283.40) | -14.67% | $3,519.06 | ($19.54) | -0.55% |
| November | $1,640.90 | ($93.10) | -5.37% | $1,596.92 | ($56.78) | -3.43% |
| December | $2,109.00 | ($156.63) | -6.91% | $1,983.51 | ($37.19) | -1.84% |
| January | $2,173.80 | ($261.74) | -10.75% | $2,121.86 | ($120.20) | -5.36% |
| February | $1,502.20 | ($196.95) | -11.59% | $1,489.64 | ($102.26) | -6.42% |
| March | $3,873.30 | ($336.09) | -7.98% | $3,904.04 | ($242.96) | -5.86% |
| April | $2,952.00 | ($942.50) | -24.20% | $2,920.08 | ($390.22) | -11.81% |
| May | $1,613.30 | ($287.50) | -15.13% | $1,804.50 | ($124.90) | -6.47% |
| June | $2,300.00 | ($415.00) | -15.29% | |||
| FY Total | $25,572.30 | ($3,254.29) | -11.29% | $24,646.36 | ($1,234.70) | -4.77% |
| * October 2009 includes $1.8 billion in non-tax revenue, largely from transfers from other funds May 2010 Includes one-time revenue from table games licenses |
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Such constant inaccuracy highlights the benefit of an independent office where it would be more difficult for politicians to use accounting gimmicks to pass a “balanced budget” that everyone knows will result in a deficit next year (and another we told you so from the Commonwealth Foundation).