-- Connecting the dots between our economy, government and business --
A must-read by former Sec. of State and Treasury: "Imagine your business could treat borrowings as revenues, avoid cost recognition by not paying expenses and report less debt than actually owed..... Fortunately, accounting for private-sector enterprises doesn’t enable such activities. But accounting for state and local governments does, and with big consequences. For example, Chicago used proceeds from the sale of 75 years of parking meter revenues to plug a single year’s budget shortfall.... Today, state and local governments are using GASB’s permissive rules to report unfunded pension liabilities at just one quarter of the $4 trillion the same liabilities are valued by the Federal Reserve’s Financial Accounts of the United States.
Summary and audio linked here.
Chicago’s political leadership is floating a pension buyout program as evidence it is seriously addressing the city’s thirty-six-billion-dollar unfunded pension liability, but Mark Glennon, founder of the Illinois policy research organization Wirepoints, said that the proposal moves debt from one column to another rather than reducing it, and that the broader fiscal picture facing the city continues to deteriorate across every measurable dimension. Audio here.
Expect no retraction or apology. This what they do.
The state’s existing buyout program for its own pensions is the precedent for Chicago, which should be a warning: Look out for similar exaggerated claims and shoddy analysis.
Full interview and summary linked here.
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Agree, fantastic articale.. wonder how the implementation of xbrl digital leger accounting/reporting standards currenly being rolled out in Republican Florida will effect phony cash/gasb accounting standards? Will state & local gov be able to play the same phony games and hide the debts? Why isnt fiscal transparency in government a civil right?
Schultz lost all credibility when he backed Theranos.