What better time than tax season to wonder: Just how are our tax dollars being spent?
One year ago this month, I opined about the near impossibility of understanding government budgets after looking at the state’s eight-inch-thick budget summary, and what one can find regarding the cities of Minneapolis and St. Paul. Their budgets were set up differently and often lacked important details. Large expenditures were sometimes labeled “other operating expenses” with no further explanation, and employee-related expenses were often lumped together under one line item titled “total compensation” or “employee expense.”
Government budgets should be as well detailed as those of publicly traded corporations, but many are not. And it seems like the bigger they are, the less transparent they become—almost as if it’s inherent for some of these institutions to produce budgets that would fail miserably in the private sector.
All of this is more pertinent than ever given the polarization between those who want to raise spending for key programs, and those who are hell-bent on cutting, or at least holding down, government spending. And this battle rages at all levels of government.
On each side, too much time has been spent stressing one’s convictions and not enough has been spent addressing the real problem—how to better manage spending. And the only way to do this is by first understanding how the dollars are currently being spent.
About a year ago, the commercial real estate development association NAIOP Minnesota teamed up with the Minnesota Taxpayers Association to try to standardize—at least in a rudimentary way—how cities and counties in Minnesota report their financials. (Hopefully, this initiative will eventually include the state’s budgeting process as well.) Their efforts have culminated in proposed legislation authored by Representative Keith Downey (R-Edina), up for discussion this legislative session.
Downey is proposing to amend current laws on how taxing authorities other than school districts manage and report their budgets. If these changes pass, counties and cities with a population of 2,500 or more will have to provide the public with electronically accessible, easy-to-understand spending and budget information.
Local governments typically present budgets by program areas, such as general government, police, fire, parks and recreation. The legislation would require information on spending by “aggregated expenditure types”—specific line items in selected key categories. Among them would be employee costs, broken down by wages and salaries, pensions, health care, and other benefits. Such information would need to be disclosed for the two prior years’ budgets, estimates of current-year spending, and projected spending in the coming year.