$19,800 per taxpayer to cover $24.7 billion shortfall
NEW ORLEANS, La. – The Institute for Truth in Accounting has released a damning “Financial State of the State” report on Louisiana’s “antiquated” accounting methods and “precarious” fiscal status. Despite a balanced budget requirement, each Louisiana taxpayer shoulders a financial burden of $19,800, as of mid-2010, their share of $24.7 billion.
The IFTA is a Chicago-based, non-partisan and non-profit organization whose members seek to promote “honest, accurate, and transparent accounting at all levels of government.” Sheila Weinberg, founder and CEO, takes particular exception with a lack of commitment to balanced budget requirements.
“If governors and legislatures had truly balanced the state’s budget, no taxpayers’ financial burden would exist… A state budget is not balanced if past costs, including those for employees’ retirement benefits, are pushed into the future.” Click below to hear a 16 minute interview with Sheila Weinberg.
Paul Rainwater, commissioner of administration, counters that Louisiana complies with “Generally Accepted Accounting Principles (GAAP) as prescribed by the Government Accounting Standards Board (GASB) [a non-governmental organization] and the Louisiana Revised Statutes.” However, IFTA members investigated the state employees retirement system, in addition to Louisiana’s 2010 audited financial report, and found $16.9 billion in off-balance sheet liabilities.
These liabilities, in the form of retirement benefits, almost double the reported level of $22.4 billion to $39.4 billion. For every dollar of benefits promised, they assert, state officials have set aside 36 cents – $10.6 billion when $30.1 billion was necessary.
“Accurate accounting requires all real and certain expenses be reported in the state’s budget and financial statements when earned, not when paid,” reads the IFTA report.
Louisiana: “The State Does Not Have the Money to Pay Bills”
Reproduced with permission from the Institute for Truth in Accounting. Data Source: State of Louisiana’s June 30, 2010 Audited Comprehensive Annual Financial Report and retirement plans’ actuarial reports
Of the state’s reported $45.4 billion assets, the authors assert that one third can be easily converted to pay due bills. The remainder is either capital assets or restricted from use by law or contract. That leaves $14.6 billion in assets available to cover $39.4 billion in total liabilities – a $24.7 billion shortfall.
Michael Diresto, Rainwater’s communications director, says that, in light of dwindling state budgets, they have already begun reforming the retirement benefits.
“In 2010, we addressed a variety of retirement provisions for new employees, for an estimated five-year savings of $66 million. These reforms made employee contribution rates more uniform across plans, calculated benefits over five years rather than three, and revised anti-spiking provisions, among others. We plan to continue along this path.”
IFTA’s press release is available here.