Research & Commentary: Pennsylvania Should Strengthen Budget Transparency Tools

Published June 29, 2018

Over the past two years, Pennsylvania has taken major strides toward increasing transparency within its budget process. In 2017, the Pennsylvania Treasury implemented a new online Transparency Portal that offers taxpayers the ability to compare the past three years of expenditures at the department and appropriation levels. The portal also provides data on the Treasury’s lines of credit, balances within the state’s investments, and other financial data.

The creation of the portal was a dramatic improvement for the state, which was in dire need of budget transparency. Robert P. Strauss, professor of economics and public policy at Carnegie Mellon University, has determined that since the 1970s, increasingly more state spending has moved from the General Fund, which is subject to greater transparency, to the what the Commonwealth Foundation calls the “Shadow Budget,” a group of more than 150 special funds that operate outside the normal budget process and are far less transparent.

Transparency provides an important check on the power of government. When taxpayers know how their tax dollars are being spent, they make more informed choices when they vote on Election Day. Dozens of states are hiding the true costs of their debts and financial liabilities. The watchdog group Truth in Accounting estimates “41 states do not have enough money to pay all of their bills and in total the states have racked up over 1.5 trillion dollars in unfunded state debt.” Truth in Accounting gave Pennsylvania a “D” grade in its 2017 Financial State of the States rankings.

Despite the improvements brought by the Transparency Portal, the state still has a long way to go. Even after the reforms mentioned above were implemented, the U.S. Public Interest Research Group (PIRG) report still gave the state a “C” grade in its Following the Money 2018 report, ranking the state 28th in the nation when it comes to providing online access to government.

A new bill that was recently approved by the Pennsylvania House of Representatives would strengthen the transparency portal and bring more state spending into the sunlight. Sponsored by state Rep. Seth Grove (R-York), House Bill 1843 would direct the state Treasury Department to expand the portal’s data to include a detailed listing of annual state budget expenditures, grouped by agency. Importantly, the bill would require state agencies to place on the portal the same unedited budget documents used to craft the governor’s budget proposal. This point has drawn some opposition from Gov. Tom Wolf (D).

The bill would also mandate budget and financial information be rendered using graphics and included in downloadable spreadsheets. Data from as far back as the 2014–15 fiscal year would need to be included. The bill would also create a new feature, the “Commonwealth Checkbook,” an online ledger providing a level of financial reporting now only seen by members of the state legislature’s appropriations committees.

While Pennsylvania’s Transparency Portal is not perfect, it provides a solid base for improving budget transparency within the state government. Providing a clear and accurate account of the state’s budget and spending practices would help keep all levels of the state government accountable to taxpayers. Under Grove’s proposed reforms, Pennsylvania’s transparency portal could become a model for other states to follow.

The following documents examine budget transparency in greater detail.

Restoring State Budget Transparency
Rebecca Whalen and Jessica Barnett of the Commonwealth Foundation discuss Pennsylvania’s need for budget transparency and what policymakers can do to achieve a more open budget and spending process.

Pennsylvania Portal Offers ‘Unprecedented’ View of State Spending
Jason Shueh of State Scoop examines Pennsylvania’s new Transparency Portal and how it has developed and expanded over time.

Overhauling Pennsylvania’s Budget Practices
Bob Dick of the Commonwealth Foundation outlines 10 budget reform ideas for Pennsylvania legislators. “Closing constitutional loopholes, ensuring government growth does not outpace economic growth, increasing spending transparency, and improving budget accountability will allow Pennsylvania to solve its persistent fiscal challenges,” wrote Dick.

Transparency Is the Key to Government Accountability
In this speech at The Heartland Institute’s Fourth Annual Emerging Issues Forum, Jason Mercier of the Washington Policy Center argues transparency measures are the key to keeping government spending and regulation under control.

Transparency Is Fundamental to Good Government
Colleen Hroncich of the Commonwealth Foundation examines state Rep. Seth Grove’s transparency bill and discusses how it could improve the current Transparency Portal.

Improving State Fiscal Transparency
In this editorial, Pennsylvania state Rep. Seth Grove discusses the rationale behind his transparency bill, how it would work, and explains why budget transparency is important for holding government accountable.

Following the Money 2018
This analysis from the U.S. PIRG Education Fund’s eighth evaluation of state transparency websites finds that despite continued improvements in transparency websites, states still have a long way to go in making critical data about state spending truly accessible to the public.

Financial State of the States 2017
In this annual study, Truth in Accounting analyzes the finances of all 50 state governments and includes detailed background information on new accounting standards, trends across the states, and key findings.

States See the Need for Spending Transparency
Sandra Fabry of Americans for Tax Reform examines several state efforts to implement legislation that would mandate the creation of comprehensive databases detailing government expenditures in a clear and consistent format that is accessible to all taxpayers.

Why Is Truthful, Timely, and Transparent Financial Data Important?
This article from Truth in Accounting discusses the importance of accurate, transparent, and clear reporting of government financial data. “States’ efforts to begin digging out from their current financial holes must start with honest government accounting. Only then can responsible alternatives to place the state on solid financial footing be developed and debated. An informed electorate is essential to a democratic system of government, and citizens have not received the financial information needed to be knowledgeable participants in their governments,” the authors wrote.

Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Budget & Tax News website, The Heartland Institute’s website, and PolicyBot, Heartland’s free online research database.

The Heartland Institute can send an expert to your state to testify or brief your caucus; host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Lindsey Stroud, a Heartland Institute state government relations manager, at [email protected] or 312/377-4000.