Also, they likely have little idea how much their respective state might owe on those credit cards although their politicians are claiming the local governments’ budgets have been balanced.
So, says Sheila Weinberg, founder of the Institute For Truth And Accounting, who claims the true federal debt is not $14.3 trillion but close to $75 trillion.
Weinberg states that each family’s debt amounts to over $600,000.
Even worse, the states are trying to climb out of a deep financial hole, despite their constitutional amendments requiring balanced budgets which has been made worse by little control over the states’ credit cards and exacerbated by using not “true numbers” in their accounting practices.
Weinberg claimed in a recent Bayoubuzz interview, that states have been employing practices would show that the budgets are “balanced but when it really isn’t. These states use an antiquated accounting system, you know they use cash accounting where they only include the checks that are written and the money that comes into their bank accounts.”
There are other measures that allow states to balance their budgets but which ultimately cause damage to their ultimate liability sheet.
Weinberg said “the state borrows money, those loan proceeds get deposited into their bank accounts, so, therefore they can balance their budgets, by borrowing money. Another way they can balance their budget is that they get bills, but they just do not write checks for them. Again, since it’s only including the checks that are written, if you just delay payment of your bills then you can balance your budget. Than what we found in pretty much all the states, except for four of them, is that they balance their budgets by using a deferred compensation scheme, where they, where retirement benefits are part of the current compensation, but because those are not paid until future years i.e. the checks aren’t written in this current period, they do not include those costs in the current budget calculation.”
Although the state budgets are balanced year after year, on balance, the states are in deep red ink.
The Institute has published a chart on its website that shows how bad matters are for most states. The state that is at the bottom of list is Connecticut with a debt as of fiscal 2009 of $41,200 per taxpayer and an overall debt of 53.3 billion dollars.
Next on the bad list are New Jersey, Illinois, Hawaii, Kentucky, Massachusetts, West Virginia and Louisiana.
The Pelican State sports a debt slightly less than $21 billion dollars and each taxpayer owes $16,800.
Not all states have been so loose with their credit cards and their accountings.
Take for example, the state in the sky, Montana. That state actually has a $3 billion surplus and resides at the top of the charts of fiscal responsibility.
While as of 2008, more states are beginning to engage in more truthful accounting, the decisions as to how to balance the budgets and handle the debts are obviously political.
In the Bayoubuzz interview, here’s what Weinberg said about a few of the states, one which has been in the international news over the past months:
BAYOUBUZZ: What, what are other states doing that seem to be making sense in terms of making sure they don’t have these massive, massive obligations?
WEINBERG: Well, I use Wisconsin as a good example, and um you’ll remember in the news last year during the budget process, there were riots in the state capitol of Wisconsin. Well, if you look on our chart, Wisconsin, there are 23 states that are in worse financial position than Wisconsin. So, you would ask well, why were there not riots in 23 other house, no, states, capitol buildings? And again Wisconsin has a taxpayer burden of quote only the number should be zero, but it’s only $5,000 dollars where Connecticut is 8 times that amount. But again there was not rioting in Connecticut, so you would ask what was the difference? And the difference is that Wisconsin uses truthful numbers when they balance their budget, and therefore they have to include the proper compensation costs, they have to include the truthful pension benefit that they are accruing, and they have to fund that benefit as they’re accruing it, it’s part of their law, so therefore because they have to include these true costs, and they use these true numbers, it forces them, and revenues have dropped, it has forced them to have to make tough decisions now, you know are we going to cut other programs, do we have to raise taxes? Do we need to adjust our pension plans? And those tough decisions have caused that rioting. Well, the reason this isn’t happening in the other states is because they don’t use truthful numbers.
Using “truthful numbers” appears to be harsh medicine for states that need to balance their budgets with less revenue and with more obligations such as pensions, Medicaid, Veterans benefits, Medicare showing on the yearly ledger sheets.
Which could mean that as more states show their real obligations, their Capitols might be under the same kind of political unrest as we are currently witnessing in Washington and which saw in Wisconsin earlier this year. The needs of the public are smacking against the realities of false numbers which is causing our families more woes as they watch both federal and state services go down drastically knowing their grandkids will be paying our bills.
by Stephen Sabludowsky, Publisher of Bayoubuzz.com
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