Former Comptroller General of the United States David Walker was in Seattle this past Tuesday (April 15) to deliver the keynote address for WPC's Government Reform Conference. Walker's speech concerning the nation’s fiscal prognosis was as powerful as it was disturbing. We'll be posting his speech in its entirety in the coming days. In the meantime, here is some the of media coverage:
On April 1, Governor Gregoire signed into law SB 6818: (Promoting transparency in state expenditures). The bill is based on Washington Policy Center’s (WPC) recommendation for the state to adopt a searchable budget website. It passed the legislature unanimously.
Here is a copy of the bill signing photo (I'm the bald guy).
Legislative supporters of increased budget transparency offered the following comments on the new law:
“One of two things will happen when you examine the budget. You either find m!
istakes so you can fix them, or you show what a good job you’re already doing. Either way, taxpayers win because we waste less on the bad and invest more in the good.” - Sen. Eric Oemig (D-Kirkland)
“My constituents tell me they’d need a PhD from MIT to understand how and where Olympia spends their money. With this new state budget website, the average person can track who gets the money, what they have to deliver, and whether or not we’re getting what we pay for. That kind of government transparency is long overdue.” - Sen. Val Stevens (R-Arlington)
“I have been an advocate for open, transparent government for many years, so I was very pleased to support the budget transparency bill pass the Legislature. Residents of Washington should be able to see how their tax dollars are spent.” - Rep. Kelli Linville (D-Bellingham).
“One of the most important changes we can make to achieve truth in budgeting is to bring more transparency to the budget process. The passage of SB 6818 is a giant step in bringing visibility to the very complex operations of state government. The Legislative and Evaluation Committee is the perfect web site to shine some sunshine on Washington State’s revenues and expenditures.” - Rep. Gary Alexander (R-Olympia)
Once the new law is fully implemented, any citizen with internet access will be able to go to a single website to search for details on where their tax dollars are spent and for what results.
Among the information required to be included on this new searchable budget website: state expenditures by fund or account; expenditures by agency, program, and subprogram; state revenues by source; state expenditures by budget object and subobject; state agency workloads, caseloads, and performance measurements; and historical information on state spending as well as access to state personal service contracts.
We'll be sure to let you know when the new website is up and running.
The Legislature’s use of referendum-denying emergency clauses dropped from 14 percent of all bills passed in 2007 to seven percent this year. Despite this reduction in the number of emergency clauses used by the Legislature, constitutional reforms are still needed to guarantee the people’s right of referendum.
An emergency clause states that a bill is exempt from repeal by referendum because the bill is, “necessary for the immediate preservation of the public peace, health or safety, support of the state government and its existing public institutions.”
The purpose of the emergency clause is to allow state government to respond to true public emergencies, like a large-scale natural disaster or wide-spread epidemic disease. Yet, over the years lawmakers have routinely abused the exemption by attaching an emergency clause to 764 bills since 1997, including 24 times during the 2008 legislative session.
This year Governor Gregoire vetoed the emergency clauses off of five bills before signing them into law. In 2007 the Governor vetoed ten emergency clauses.
Governor’s Gregoire’s decision to strip the emergency clause out of some bills, bills that clearly do not address public emergencies, is a positive development. The increased scrutiny by the public and the Governor has had a measurable impact on mitigating the Legislature’s abuse of the emergency clause.
There is no guarantee, however, that this trend will continue. The most effective way to end the Legislature’s abuse of the emergency clause is with a constitutional amendment creating a supermajority vote requirement for its use.
Click here for additional details on the emergency clause situation.
A recent controversy has developed around just how much state spending has increased. A quick glance at spending (Near General Fund State) for the 2003-05 budget shows $25.6 billion. Fast forward to the enacted 2007-09 budget and that number grows to $33.7 billion. That $8.1 billion increase in spending represents approximately a 32 percent increase.
According to the Office of Financial Management (OFM), however, state spending has increased by $6.9 billion, or 27 percent.
Why the difference?
OFM says that $1.2 billion is being counted twice, so they show state spending for 2007-09 at $32.5 billion, not $33.7 billion.
You may recall that during the 2005-07 budget lawmakers "spent" money into savings to artificially increase the I-601 spending limit. OFM says that if you count that money as being spent only once (during 2005-07) it isn't spent again in 2007-09.
The Legislative Evaluation and Accountability Program (LEAP) Committee, however, says it shows state spending for 2007-09 as $33.7 billion, not the $32.5 billion reported by OFM.
LEAP was created to be the "Legislature's independent source of information and technology for developing budgets, communicating budget decisions, and tracking revenue, expenditure, and staffing activity."
So has state spending increased by 27 percent or 32 percent? Good question and we're working on unraveling the discrepancy. There shouldn't be a $1.2 billion difference between OFM and LEAP on how much the state is spending.
Either way the non-partisan Senate Ways and Means Committee projects a $2.5 billion deficit for 2009-11.
Apparently some employees at the U.S. Postal Service (USPS) think happy hour is best when on the taxpayer's dime. A U.S Government Accountability Office (GAO) audit released yesterday found:
"USPS paid over $13,000 for 81 conference attendees to dine at an upscale steak restaurant in Orlando, Florida, in 2006. The dinner, which cost over $160 per person, included steaks, crab, appetizers, and over $3,000 in alcoholic beverages purchased over a 5-hour period. We define this transaction as abusive . . . According to USPS, 108 individuals were invited to the dinner and 95 attended. While USPS provided us a list of the 108 invitees, it was not able to identify the 95 invitees whom it claimed actually attended. Further, independent, third-party evidence we obtained from Ruth’s Chris Steakhouse showed that 81 individuals attended the dinner."
This was just one of man!
y examples identified by GAO in its review of wasteful purchases made with federal credit cards. The audit further notes:
". . . during the 10-year period from fiscal year 1996 through 2006, acquisitions made using purchase cards increased almost fivefold—from $3 billion in fiscal year 1996 to $17.7 billion in fiscal year 2006 . . . the number of purchase cardholder accounts peaked in 2000 at more than 670,000, but since then the number of purchase cardholder accounts has steadily decreased to around 300,000 . . . we estimated that 41 percent of purchase card transactions were not properly authorized or purchased goods or services were not properly received by an independent party (independent receipt and acceptance). We also estimated that 48 percent of purchases over the micropurchase threshold were either not properly authorized or independently received. Further, we found that agencies could not provide evidence that they had possessio!
n of, or could otherwise account for, 458 of 1,058 accountable!
and pilferable items."
Other examples of federal credit card waste:
From October 2000 through September 2006, a cardholder at the Department of Agriculture (USDA) fraudulently paid over $642,000 to a live-in boyfriend who shared the same bank account as the cardholder. The $642,000 was used for personal expenditures, such as gambling, car loan and mortgage payments, and other retail purchases. The activities took place over a 6-year period, but were not detected by the agency until a whistleblower reported the cardholder to the agency’s Office of Inspector General in 2006. The cardholder was sentenced to 21 months in prison and ordered to pay restitution of over $642,000.
A postmaster at USPS used his government purchase card to fraudulently subscribe to two Internet dating services over 15 consecutive months (April 2004 through October 2006). The monthly charges for these dating services were the only charges that appeared on the cardholder’s monthly statements during this period; yet each of these charges was authorized and paid for by USPS. The cardholder paid restitution of over $1,100 but faced no disciplinary action for this fraud.
It would be interesting to see if the same types of credit card abuses are happening at the state level. Perhaps this is something the State Auditor will look into.
Speaking of GAO, former U.S. Comptroller General David Walker will be delivering the keynote lunch address at our Government Reform Conference on April 15. Details here.
Governor Christine Gregoire signed into law today SB 6818 (Promoting transparency in state expenditures). The bill is based on Washington Policy Center’s (WPC) recommendation for the state to adopt a searchable budget website. It passed the legislature unanimously.
Click here to see our press release on the bill signing.
The Governor is planning to finish bill signings tomorrow which means she'll be taking action on SB 6818: Promoting transparency in state expenditures. SB 6818 is based on WPC's recommendation for the state to follow the lead of the federal government and other states by adopting a searchable budget website. Hopefully with an April 1 bill signing the joke will be on those who don't want increased budget transparency, not taxpayers.
"By the time state lawmakers convene again next year, their results will be under the scrutiny of a new set of eyes -- yours.
If you care to find out how they're spending your tax money, that is.
In a welcome boost for government accountability, the Legislature unanimously approved the creation of a new Web resource that will allow citizens to quickly and intuitively access detailed, understandable information on state spending and taxes. Much of that information is already available on the Web, but it's hard to find. And once you find it, good luck making sense of it. The idea of this new site is to bring it all together in one user-friendly place where average taxpayers can see where their money is going."
The Herald also ran a news article about the new reform yesterday. The bill is currently awaiting the Governor's signature.
When you’re done filing your taxes on April 15, 2008, come join Washington Policy Center for an interactive conference on how to make government work best for taxpayers. Former U.S. Comptroller David Walker of the Government Accountability Office (GAO) will deliver the keynote lunch address. Walker has been touring the nation imploring Americans to "wake up" and deal with the growing fiscal cancer facing the nation.
David Walker is a prudent man and a highly respected public official. As comptroller general of the United States he runs he Government Accountability Office, the GAO, which audits the government's books and serves as the investigative arm of the U.S. Congress. He has more than 3,000 employees, a budget of a half a billion dollars, and a message he considers urgent.
"I'm going to show you some numbers…they’re all big and they’re all bad," he says.
So bad, that Walker has given up on elected officials and taken his message directly to taxpayers and opinion makers, hoping to shape the debate in the next presidential election.
"You know the American people, I tell you, they are absolutely starved for two things: the truth, and leadership," Walker says.
He calls it a fiscal wake up tour, and he is telling civic groups, university forums and newspaper editorial boards that the U.S. has spent, promised, and borrowed itself into such a deep hole it will be unable to climb out if it doesn’t act now. As Walker sees it, the survival of the republic is at stake.
"What’s going on right now is we’re spending more money than we make…we’re charging it to credit card…and expecting our grandchildren to pay for it. And that’s absolutely outrageous," he told the editorial board of the Seattle Post Intelligencer.
Along with Walker, national budget and tax experts will also be speaking at the April 15 conference. Click here for additional details.
At the invitation of Councilmember Kathy Lambert, I had the opportunity this morning to brief the King County Council on budget reform tools it could use to help prioritize the county's budget and address the structural deficit caused by overspending. My presentation focused on utilizing the following best practices to prioritize and efficiently deliver core government services:
Balanced budget requirement
Spending limit/Rainy day account
Non-partisan revenue forecast
Performance budgeting (POG)
By effectively using these budget tools in concert, spending can be prioritized and structured to avoid self-inflicted deficits. This means a budget is better positioned to weather economic downturns while delivering the performance outcomes citizens expect and deserve of their government.
Put down your umbrellas, Sunday marks the beginning of Sunshine Week (March 16-22). Sunshine Week is a national effort to highlight the importance of the ongoing battle for open and accountable government and the people's right to know.
The primary audience for the insert is high school students. Teachers throughout Western Washington will use the insert this coming week in conjunction with the nationwide recognition of "Sunshine Week" to teach students about their rights and responsibilities as citizens. The insert, which is designed to help meet the Essential Academic Learning Requirements for civics in high school classes, is filled with eye-popping graphics and informative articles such as "What is Open Government?", "The People Are in Charge", "Access Your Government", "Is Open Government Important?", "Know What to Know", "Why Continue to Cultivate Open Government in the United States?", "How Do I Obtain Public Records?", and "Freedom of the Press and Open Government". It also includes a number of suggested activities for stu!
dents and classes, summaries of state and federal open government laws, sample public records requests, information on WCOG's upcoming Sunshine Week town hall, and web links for further information.
While the insert is designed to be useful in the classroom, it is also an important introduction to open government principles and laws for many Washington residents who have never previously had the opportunity to learn this important information.
Sunshine Week is a good time to remember that defending and enhancing access to information on the conduct of our government is vital to maintaining a free society. We are all responsible for protecting the people's right to know and we must stay actively involved in this endeavor to ensure the tools necessary to hold our government officials accountable are available.
The 2008 supplemental conference budget was released for public view today. Lawmakers will have until tomorrow to wade through the 407 pages to understand the spending increases they are being asked to approve. It took me a couple of hours, but I just finished reading through the proposed spending plan and found a couple of things worth noting.
I-960's finger prints are all over the supplemental budget. Last year's voter-approved initiative requiring legislative approval of all fee increases first makes an appearance in Section 127 (12) which requires the Office of Financial Management (OFM) to track its cost to implement the requirements of I-960 and report the results to the Legislature by November 1.
Section 127 (15) then instructs OFM to "conduct a review and analysis of all fees for which the legislature has delegated to state agencies and institutions of higher education the ability to establish and determine the amount, either upon initial establishment or subsequent increases . . . The objective of the review and analysis is to document the level of fees paid over the past five years, the cost of those programs over that same time period, and, to the extent available, the effectiveness of the activity in meeting its performance targets." The report is due by October 1.
The budget then authorizes agency fee increases in Sections 218 (23), 222 (1), 302 (4), 309 (1), 401 (1), 602 and 603. These are in addition to the fees being increased in HB 3381. Though not a fee increase, Section 222 (54) authorizes spending $130,000 from the General Fund to supplement a reduction in revenue from midwifery licensure fees.
Along with I-960, I-900 (performance audit authority for State Auditor) also makes an appearance in the budget. Section 139 (5) directs the Department of General Administration to report by August 31 its progress towards implementing the recommendations of the Motor Pool performance audit. A similar requirement is placed on OSPI in Section 501 (2)(b)(ii) concerning the performance audit of the state's Educational Service Districts.
Though there are plenty of other spending decisions worth highlighting the final one I'll point out is the attention paid to the state's paid family leave program:
Section 227 (11) $6,218,000 of the family leave insurance account--state appropriation is provided solely for implementation of the family leave insurance program.
(a) The amount provided in this subsection assumes that, in developing the information technology systems to support the payment of benefits, the department will incorporate the claim filing and benefit payment efficiencies recommended by the joint legislative task force on family leave insurance in Part III of its final report dated January 23, 2008, including:
(i) Eliminating the option for awarding attorney fees and costs for administrative hearings;
(ii) Authorizing claims for benefits to be filed in the six-week period beginning on the first day of the calendar week in which the individual is on family leave;
(iii) Not requiring claimants to verify the birth of a child or the placement of a child for adoption;
(iv) Including an attestation from the claimant that written notice has been provided to the employer of the intention to take family leave; and
(v) Not deducting and withholding federal income taxes from benefit payments.
(b) In addition, the department shall incorporate the following claim filing and benefit payment efficiencies:
(i) Define "qualifying year" to mean the first four of the last five completed calendar quarters or, if eligibility is not established, the last four completed calendar immediately preceding the first day of the application year;
(ii) Allow individuals to file a claim for benefits in the six-week period beginning on the first day of the calendar year in which the individual is on family leave; and
(iii) After an initial family leave insurance benefit is paid, subsequent payments must be made biweekly, rather than semimonthly, thereafter.
Who needs to pass a paid family leave funding bill when you can design the payments via the budget?
The Senate just unanimously concurred with amendments made by the House to SB 6818 (Promoting transparency in state expenditures). All that remains now for this reform to become law is the signature of the Governor. SB 6818 is based on WPC's recommendation for the state to follow the lead of the federal government and other states by adopting a searchable budget website.
It passed the House 94-0 last week and was previously adopted in the Senate by a vote of 48-0. According to the House bill report:
By January 1, 2009, the LEAP Committee, in collaboration with the OFM, is directed to make publicly available a searchable state expenditure information website. The website must contain information on: (1) state expenditures by fund or account; (2) expenditures by agency, program, and subprogram; (3) state revenues by source; (4) state expenditures by budget object and subobject; and (5) state agency workloads, caseloads, and performance measurements. The website must provide current and historical information.
The LEAP Committee must prepare and post on a public website, a presentation specific to K-12 education funding. The presentation will show examples of the type and level of educational programs and services supported by funding appropriated in the budget for the support of common schools. In addition, the website must contain a link to an OFM website on personal services contracts required to be filed with the OFM.
The news wires are a buzz this morning with stories about yesterday's vote by the House on HB 3381 -- an omnibus fee increase bill. Many of the stories mention that prior to I-960 agencies were allowed to increase fees up to a certain percentage as authorized by law. While this is true, the legislature would consistently insert blanket authority via a budget proviso for agencies to increase their fees in excess of the fiscal growth factor. Here is just one of the many examples in the base 2007-09 budget:
The appropriation in this section is subject to the following conditions and limitations: During the 2007-2009 fiscal biennium, the commission may increase license fees in excess of the fiscal growth factor as provided in RCW 43.135.055.
These budget provisos provided agencies with a blank check to increase fees to any level they desire. I-960 changes that process by requiring the legislature to approve the actual fee increase amount instead of delegating that authority to agencies – a process that appears to be working at this time though the following sections of HB 3381 appear to be in conflict with this requirement:
Under I-960 the legislature needs to authorize the actual fee increase amount or can authorize a percentage increase as done in section 30 of HB 3381, but it can’t delegate the decision on the fee increase to the agency without an amendment of I-960 (this would be just like the previous system of inserting blanket line item provisos for agencies to increase fees at will without legislative approval for each increase as required by I-960).
Here are today's articles on the legislative vote:
Attempting to beat the buzzer, supporters of taxpayer subsidies for the Sonics are making a last ditch effort to convince lawmakers to approve the latest proposal for PUBLIC-private funding of a Key Arena remodel.
While this may be the best PUBLIC-private proposal put forth to date, the only thing that should be considered is a PRIVATE-private partnership. If elected officials are so intent on providing tax dollars to lure and retain sports teams they should limit their efforts to taxes on ticket sales –- a.k.a. a user fee.
As of now, it appears House Speaker Frank Chopp is the most prominent advocate for not using public funds for private sports teams –- a position widely supported by those who favor limiting government taxes and spending to the core functions of government (for the curious this does not include “Saving the Sonics”).
Jason Mercier is Director of the Center for Government Reform at Washington Policy Center. He is a contributing editor of the Heartland Institute’s Budget & Tax News, serves on the board of the Washington Coalition for Open Government, and was an advisor to the 2002 Washington State Tax Structure Committee. In June 2010, former Governor Gregoire appointed Jason as WPC’s representative on her Fiscal Responsibility and Reform Panel. Jason holds a Bachelor’s degree in Political Science from Washington State University.