Public Finance: October 2008 Archives

There is not a public official alive that likes to be at the bottom of a 50-state ranking, especially on close-to-home issues such as education, poverty and economic development.  Even seemingly arcane rankings of readiness for the Year 2000 date field roll-over or maturity in delivering government services online can raise the ire of people associated with states in the back half of the pack.

What is worse is when there is really no honor in being in the top half of states on measures of open records laws; whistle blower laws; campaign finance laws; open meetings laws; and conflict of interest laws.  That is the story that quickly emerges in reviewing state standings on the newly released second edition BGA-Alper Integrity Index that gauges the relative strength of state laws on transparency, accountability and limits in government.  The index was created by a non-partisan waste-busting watchdog group -- the Better Government Association -- that has been holding public agencies to account since 1923.

The serial, templatized press releases for the top ranked states indicate that they are to be congratulated for their ranking, even though the best of them only merits a letter grade of "D" on the BGA assessment.  It is not a terrific report card, with many states performing well on one or more measures and sucking channel water on the others.  Here are the rankings in order (with imbedded links to the cookie cutter press releases on each state):

1. New Jersey
2. Rhode Island
3. Hawaii
4. Washington
5. Louisiana
6. Nebraska
7. Texas
8. Arkansas
9. Maryland
10. Colorado
11. Arizona
12. Illinois
13. West Virginia
14. Connecticut
15. Minnesota
16. Florida
17. Wisconsin
18. Kansas
19. California
20. Massachusetts
21. Oklahoma
22. Missouri
23. North Carolina
24. Michigan
25. Pennsylvania
26. Iowa
27. Georgia
28. Kentucky
29. Indiana
30. South Carolina
31. Ohio
32. Oregon
33. Maine
34. North Dakota
35. Nevada
36. New York
37. Utah
38. Virginia
39. Mississippi
40. Alaska
41. New Hampshire
42. New Mexico
43. Delaware
44. Idaho
45. Wyoming
46. Montana
47. Tennessee
48. Alabama
49. Vermont
50. South Dakota

According to the BGA rankings, South Dakota owes its last place finish to earning only a third of the available points -- ranking 49th in open records laws, 46th in both whistle blower and open meetings laws, 34th in campaign finance laws and 27th in conflict of interest laws.  BGA Executive Director Jay Stewart concludes, "If you look at the percentage score, South Dakota received 32%, the equivalent of a F letter grade, hardly a cause for celebration."

In defense of South Dakota particularly, and all states to a certain degree, the BGA index lacks context or more than a single dimension.  Sure it looks at five areas of law but it gives no consideration to how states of performing under those laws.  Clearly, BGA sees South Dakota's open records laws as the second weakest in the land but the state's Open SD portal is apparently much better than the underlying law, providing a single spot on the Internet where South Dakotans can see how their governments are spending money.

If there is to be a third edition of the BGA-Alper Integrity Index, it would be fascinating to see an assessment of how well - or how poorly - states are executing against the underlying laws.

Asian stock markets began the new week at 26 year lows and a sharply lower Dow futures market was a harbinger of more bad news domestically.  And some of that bad news came from a new report on state government revenues.

The Center on Budget and Policy Priorities surveyed 15 states and the news was universally downbeat.  Revenues for the quarter just ended were lower than in the same period in 2007 in the majority of surveyed states.  When adjusted for inflation, total revenue collections are below last year's levels in all but one of the 15 states covered in the survey.

The median state experienced a 5.5 percent decline in total tax revenue after adjustment for inflation. The sales tax story was even worse.  The report says, "Revenues are down in every one of those 15 states, with a median decline of 7.3 percent after adjustment for inflation."

The report says the numbers can be explained by the crisis in consumer confidence that is seen throughout the economy, and reflects the anxiety created by the loss of a half million jobs between September 2007 and September 2008.

The report's authors expect government service delivery to pay the price for the constitutional requirement on states to balance their budgets:

Many of the actions states take to balance their budgets will be harmful to families and to the economy.  State taxes pay for state aid to K-12 schools, support for public colleges and universities, health coverage for children, families, seniors and people with disabilities, public safety, and transportation.  States are enacting cuts in all these areas already.  They are also increasing taxes and fees.  Both spending cuts and revenue increases take money out of state economies, deepening the nation's economic problems.

State finances have not been this tight since 2002 when states slashed spending on health care insurance and education.  That could happen again this time around or, borrowing a page from Wall Street and the financial services sector, the federal government could step in with loans and a bail out package for political subdivisions.

The hardest hit states among the 15 in the CBPP survey -- when adjusted for inflation -- are: Washington (11.3%); Tennessee (9.5%); Idaho (9.1%) and Virginia (9.0%).  On a percentage basis, the country's largest states did moderately better -- with California experiencing a 6 percent decline and New York revenues off by a 1.3 percent.