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Wednesday, January 28, 2009

Pawlenty's Budget - Say 'No' to Timing Shifts

There are many things to dislike in the Governor's newest budget proposal, but I'm going to pick out my favorite for a rant.

I understand that it's 'legal', and it has become a convenient bad habit, but using 'accounting' or 'timing' shifts to balance a government's budget is wrong on many levels.

Year after year, especially when Steve Sviggum was the Speaker of the House, the state has played a shell game with the timing of payments, and look where we are today. At some point, the rubber band snaps back, and the entire bill is due.

I'm an accountant by trade, so acknowleding expenses when they're incurred, and revenue when it's earned is imprinted in my DNA. Cash flow is a separate topic. If the state is going to delay $1.3 billion in payments to school districts, etc. as a way of 'balancing' a budget, it doesn't mean that the money isn't owed. If you use a gas credit card, and don't pay the balance in full every month, it doesn't mean that you didn't incur gas expense. You're just using the credit card company as your bank.

I don't think the State of MN should use local school districts as a bank. In some cases, these magical 'accounting shifts' of payments require local districts to dip into lines of credit with their local banks to maintain their cash flow. That's not right.

The most amazing problem this causes is setting up the next budget to be $1.3 billion in the hole before you even start. Does the governor figure that somebody else will be in charge by that time, so it isn't his problem? I'm amazed that otherwise sane adults can issue press releases announcing a problem is 'solved', when they've created the problems caused by timing shifts.

How about engaging in an honest, thoughtful discussion about the proper size of government, and how the cost of government should be funded. Stop with the one-time gimmicks. They don't work.


Avidor said...

Sounds kind of Ponzi-ish.

lloydletta said...

This reminds me of when the state put out the crosstown project out for big - and they wanted to have the contractors to act as a bank.