(Springfield, IL) – March 2, 2010. As Governor Pat Quinn prepares to unveil his solution to the state’s $13 billion budget deficit, one suburban Republican is working to change the state’s accounting practices.
State Rep. Mike Tryon (R-Crystal Lake) wants lawmakers to account for future debt along with unpaid bills in any budget they pass.
Tryon said new rules are needed to show the public how the state got so mired in debt despite a constitutional requirement requiring a balanced budget for each fiscal year.
“That’s what the intent of this is to do — to make the state accountable for its budgeting and spending practices,” he said.
The state uses what is called “checkbook accounting” in drafting its budget. The state must ensure that its expenditures match its revenue. But future bills are not taken into account under this system. Borrowed money can be counted as cash-on-hand to pay the state’s bills without taking into account the dollars needed to pay back the loan.
Tryon’s proposal would require the state to include future payments, including public employee retirement costs and debt repayment, in any budget draft in order to give lawmakers and the public a clearer understanding of state finances.
Sheila Weinberg, chief executive officer of the non-partisan Institute for Truth in Accounting, said the practice, known as “gap accounting,” would give Illinoisans a more accurate picture of the state’s debt.
“What the fact-based budgeting would do (is) make them account for all the costs, regardless of when they paid it,” said Weinberg, who helped Tryon craft the legislation.
“What they’ve been doing with cash-based budgeting is hide costs because we’re not actually writing the physical check.”
Tryon’s proposal does have some support from Democrats. State Rep. Frank Mautino (D-Spring Valley) said he would be in favor of the switch to gap accounting, though he has not yet seen the legislation.
“Our budgetary system…doesn’t give a true and proper picture of what bills are due and owing, so I actually like the gap system because you know more where you’re at,” he said.
But Mautino acknowledged that gap accounting has met some resistance in the past. When future debt is included in the budgeting process, the state would have to set aside more money to cover the liability, which could divert dollars from other services.
The state could also lose out on federal subsidies if it cut spending on programs like Medicaid, since the federal government provides matching funds for every dollar the state spends on the healthcare program for the poor and disabled. Quinn has said federal dollars are crucial to managing the state’s fiscal crisis.
The legislation, known as the Truth in Accounting Act, has not yet been assigned to a specific committee.
In addition to Tyron, House sponsors include: Jack Franks, Patricia Bellock, Michael Connelly, Jim Durkin, Roger Eddy, Rich Myers and David Reis.