SAVE Commission's findings - La Follette School of Public Affairs ...

governments and have a strategy for downsizing
the $15 billion state building asset, which could
be a liability in a high-tech age. It should start
getting more out of its $150 billion employee
knowledge asset, now tapped at a fraction of
its potential.
CALCULATE TRUE COSTS AND
REAL ASSETS
Government gets into fiscal trouble because
it has trouble counting. Unlike business,
it manages by a method called cash accounting,
which essentially is paying today’s bills today.
It is less aware of the cost of today’s spending
decisions on future
taxpayers.
State and local
government should
adopt full accrual accounting
that gives a
more accurate picture
of the cost of decisions
against present and future
taxpayers. An example
would be calculating
the cost of health
benefit or pension decisions. That bill has to
be paid in the future and decision makers
should know the cost before they vote.
Wisconsin is not in as bad shape as Washington,
which has difficulty calculating its total
debt. But there is a need for better information
here as well; the state should have a reporting
system simple enough for the non-accountant
to understand. Debt, for example, could be
“Programs that have outlived
their usefulness continue to drift
along. Force a periodic, careful
review of every existing state
program.”
Anonymous
periodically compared to an index, such as economic
growth. The new media, taxpayer groups
and average citizens should have the information
they need, in the form they need it, before
specific spending decisions are made that will
burden their children.
Linked to full accrual accounting will be
a “truth in spending” function that serves legislative
and executive branches. The function
will be charged with keeping a running tally of
present and future costs, not only in generic
terms, such as to all taxpayers, but to specific
taxpayer groups.
For example, the truth-in-spending function
would know and communicate the continuing
tax, fee and liability burden on different
kinds of households,
business groups
or property owners. It
would cost out decisions
on the basis of
generation groups—socalled
generational accounting.
Conversely, it
also would add lifetime
costs of entitlement, infrastructure,
pension
and tax break decisions, potentially controversial,
but necessary for better decision making.
Essentially, government accounting must
rethink its work, much of it now focused on
implementing the system of checks and rechecks.
In the long term, it will be able to calculate
the value of employees’ knowledge capital
(a current research project). It will be a transformation
for a method of calculation that now
focuses on price, not cost, and seldom on value.
Actions
16.1
Establish a Sweeping
Sunsets process.
16.2
Apply the Sweeping
Sunsets test to advisory
bodies.
16.3
Adopt full accrual
accounting.
16.4
Adopt “Truth in
Spending” evaluation
principles everywhere.
16.5
Adopt an ongoing
process to sell
unnecessary buildings
and other infrastructure.
Mark Rogacki,
Wisconsin Counties
Association
“Pensions are a long
term fiscal problem that
demand state and local
attention.”
R E S U L T S
Continuous renewal will:
1 Allow the state to shut off the lights
on outdated programs that are no
longer useful.
2 Begin the process of continual
sunsetting on agencies, tax
exemptions, councils, programs and
more.
3 Review unfunded state mandates
imposed on local governments,
eliminating or funding all by 1998.
4 Force the state to manage by full
accrual, not cash, accounting.
5 Begin a truth in spending function to
keep a running tally of present and
future costs for all taxpayers.
CITIZEN • COMMUNITY • GOVERNMENT — WISCONSIN: THE 21 ST CENTURY 45