By Frank Keegan – Keep the celebrations short and get to work, new governors and legislators, because what you just won dominion over is fiscal rubble. You have at least a $10 trillion catastrophe to restructure you don’t even know about. Already you are running out of time. As all of America learned Tuesday, citizens are not in the mood for more government spending and higher taxes.
Anybody seeking signs of the underlying political earthquake that churned up a Congressional tsunami need probe no further than state elections.
Voters turned over 711 legislative seats and Republicans took legislative control away from Democrats in 11 states. According to the National Conference of State Legislatures, Republicans now have the most control over state governments since 1928.
Just in case the message is not clear enough, citizens rejected every tax increase initiative, according to NCSL, and “Thanks to the results on a handful of key ballot measures, legislatures are going to have an even tougher time than they anticipated balancing state budgets in some states.”
A comprehensive state-by-state list of all ballot measures is available at Ballotpedia.com .
The first thing every governor and state legislator should do is read Government Accountability Office study GAO-10-899.
It says in no uncertain terms, “We calculated that closing the fiscal gap over the next 50 years would require action to be taken today and maintained for each and every year going forward equivalent to a 12.3 percent reduction in state and local government current expenditures.”
That staggering message is the good news. The bad news? It is based on old, mainly pre-recession data that accepts bogus official government numbers and assumptions. Worse news is the GAO didn’t catch everything, even from some of their recent studies.
For example, ask Florida governor-elect Rick Scott exactly how he plans to deal with trillions of dollars in hidden debt that beleaguered state’s citizens must pay on top of everything else.
According to a report last month by Loop Capital – which just like GAO accepts deceptive official numbers — Florida’s “economic” debt more than doubled last year to $43.3 billion, moving it from 20th worst in the nation to 9th.
That is $2,334 per woman, man and child; 6.2 percent of all personal income, according to the report.
But even that economy busting number does not include the more than $2 trillion – yes, TRILLION – taxpayers owe the state natural catastrophe insurance program, according to GAO-10-568R.
Floridians can pay up now, pay later, or hope their state never again is hit by hurricanes. What are the odds?
It does not include tens of billions the American Society of Civil Engineers Infrastructure Report Card says the state must invest over the next five years just to keep vital public works from falling apart.
GAO and Loop did not include the potential cost of exotic investments officials got themselves suckered into because, well, nobody knows how many did or how bad the damage is going to be.
The Securities and Exchange Commission is trying to figure it out now.
In fact, before they take office the new crop of governors and legislators need to ask their states’ career accountants, auditors and actuaries – many of whom have been warning politicians against bookkeeping tricks for years – these questions:
Is your latest Fiscal Year Comprehensive Annual Financial Report done? If not, why, and when will it be?
What are the true Unfunded Actuarial Accrued Liabilities of your pension and Other Post Employment Benefits funds, and are you making your Annual Required Contributions?
Are you invested in any Variable Rate Demand Obligations, Auction Rate Securities, Interest rate swaps or other exotic financial deals?
Do you have enough cash on hand from revenues to pay bills and tax refunds?
Are you borrowing to pay current expenses?
Are you meeting your current debt obligations?
Are you able to meet your Medicaid obligation?
Are you or do you anticipate borrowing from the federal government for unemployment insurance payments?
Have you or do you plan to delay capital projects or sell assets?
Will you carry an operating balance into next fiscal year? If so how much is it compared to prior years, and how will you make up loss of American Recovery and Reinvestment Act funds?
As soon as they take office, they must pass Truth in Accounting laws to make sure the official lies, delusions and self deceptions stop immediately.
Every state and their municipalities must deal now with hidden deficits that are approaching critical mass.
Unless they act, citizens and public workers are doomed to endure massive tax increases and drastic service cuts as more and more money goes to pay debts that will endure forever.
Frank Keegan is a national editor for The Franklin Center for Government and Public Integrity, watchdog.org and statehousenewsonline.com . Any new governor, legislator, disgusted public employee, journalist, activist organization or citizen watchdog who wants help exposing government waste, fraud and abuse may contact him at: [email protected]