Report: Transparent & Accountable Budgets

California Budget Transparency 2.0

Online Tools for Better Government
Released by: CALPIRG Education Fund

The ability to see how government uses the public purse is fundamental to democracy.  Budget transparency checks corruption, bolsters public confidence in government, and promotes fiscal responsibility. 

In the private sector, internet search technology has revolutionized the accessibility and transparency of information. We take for granted the ability to track deliveries online, to check cell phone minutes and compare real estate on the Web, even to summon – at the click of a mouse – satellite and street-level views of any address. But until recently, when it came to tracking government expenditures online, we were left in the dark.

State governments across the country are changing that. At least 29 states currently mandate that residents be able to access a searchable online database of government expenditures. These states have come to define “Transparency 2.0” – a new standard of comprehensive, one-stop, one-click budget accountability and accessibility.

With the state in the midst of an historic budget crisis, it’s especially important for Californians to have easy access to information about the state’s expenditures. California has taken some steps towards better transparency, but still falls far short of the best practices established by other states. California should fill in the gaps in government reporting and bring its online transparency up to speed, so that Californians can stay abreast of – and have the tools to influence – the difficult decisions being made in Sacramento.

The movement toward Transparency 2.0 is broad, bipartisan, and popular

· A nationwide wave – In just the past two years, legislation and executive orders in 29 states have given residents access to a searchable online database of government expenditures, and the federal government has taken similar initiatives. 

· Bipartisan efforts – Transparency legislation has been championed by legislators both Republican and Democratic. In 2008, federal legislation to strengthen web-based budget transparency was cosponsored in the Senate by presidential rivals John McCain (R-AZ) and Barack Obama (D-IL).

· Public support – When asked about the role of transparency in the economic recovery package of early 2009, three-quarters of voters responding said that “creating a national Web site where citizens can see what companies and government agencies are getting the funds, for what purposes, and the number and quality of jobs being created or saved” would have an important impact on the package, with 39 percent believing its impact would be extremely important. Support for state transparency Web sites to monitor recovery funds received almost equally high marks, again from Republicans, independents and Democrats: fully 75 percent of American voters said creating state level Web sites to track funds was “important,” and 34 percent said it was “very important.”

Transparency 2.0 saves money and bolsters citizen confidence.

· Increased civic engagement – Americans are eager to use transparency Web sites. Houston officials report improved public confidence after the launch of their transparency Web site. The Missouri Accountability Portal received more than 6 million hits less than a year after its launch.  

· Low cost – Budget transparency Web sites can be inexpensive to create and maintain.  The federal transparency Web site, which allows Americans to search over $2 trillion in federal yearly spending, cost less than $1 million to create. Missouri’s Web site, which allows its residents to search over $20 billion in state annual spending and is updated daily, was created with already-existing staff and appropriations.

· Big savings – Transparency Web sites can save millions through more efficient government operations, fewer information requests, more competitive contracting bids, and lower risk of fraud. In Texas, the Comptroller reports $2.3 million in savings from more efficient government administration following the launch of the state’s transparency Web site. Utah estimates millions in savings from reduced information requests. The largest savings may come from the deterrence of waste or abuse of public funds because public officials or contractors know that decisions are open to scrutiny.

· Better-targeted expenditures – Transparency budget portals allow states to track how well subsidies and tax incentives deliver results. Funds from underperforming projects and programs can be reinvested in successful programs. By tracking the performance of state subsidies, Minnesota and Illinois have both been able to recapture money from numerous projects that failed to deliver promised results. Agencies can also more efficiently achieve affirmative action goals by identifying leading departmental practices and contractors that advance these goals.

· Better coordination of government contracts – The Massachusetts’ State Purchasing Agent identifies four sources of savings for state procurement officers: sharing information with other public purchasers on good deals; avoiding wasteful duplication of bidding and contracting procedures through centralized processes; better enforcement of favorable pricing and contract terms; and focusing cost-cutting in areas where greater resources are spent.

California’s transparency Web site puts the state on the right track, but still has major deficiencies.

· Good first step into Transparency 2.0 – California’s new “Reporting Transparency in Government” Web site gives residents access to a number of sets of crucial government accountability information, all on the same Web site. In particular, state contracts paid by government agencies are keyword-searchable by department, supplier name, and price. The information can be downloaded as an Excel document as well, making it easier for Californians to analyze the data.

· An effective and cheap tool – The Web site cost California only $21,000 to create, and it will cost under $40,000 annually to keep the site accurate and up-to-date. Californians are using the site daily – over a million hits were logged in the site’s first six months online – and it has already helped the state save money. Visitors to the site noticed an audit that showed that many of the state’s vehicle fleet were not needed, and the state will be reducing the fleet by 15 percent as a result, saving the state $24.1 million.

· Information on corporate tax breaks and subsidies is missing – California spends over $4 billion a year on corporate tax breaks and subsidies, yet there is only limited information on these subsidies available online, and no information on their effectiveness. For example, the state grants about $500 million a year in tax subsidies to corporations that do business in economically depressed areas. This subsidy is intended to bring jobs and businesses to areas that solely need them, and encourage business to hire disadvantaged workers. However, there is no information available about the numbers of jobs this program creates, where those jobs are created, and whether they actually go to disadvantaged workers.

· Certain government agencies are missing – Quasi-public and independent government agencies do not report contracts on the new transparency Web site. Examples of agencies not include on the site include the University of California, the California Prison Industry Authority, and the California High-Speed Rail Authority. Quasi-public and independent agencies are responsible for many important government functions, but are notoriously immune to public accountability, and can have budgetary problems that cost the state millions of dollars.

· Contract purposes are not listed – Government contracts are now listed on California’s “Reporting Transparency in Government” Web site, but the details that would make this information useful to laypeople are left out. The purpose of the contracts listed is not included on the site, which means that Californians can now see a list of all of the contracts from the state’s prison system and who they went to – if they know to search for the “Department of Corrections and Rehabilitation” – but still have no idea what goods or services the state received for that money.

· Contract information is not browsable - Commercial internet vendors know that a few extra clicks make it far less likely that users will get to their destination. Leading states allow residents both to browse broad, common-sense categories of government spending and to make directed keyword and field searches. California’s transparency Web site has some search functions, but contracts are provided only as a complete list, making the accessibility of the site far inferior to that of other states.

California should fill in the major holes on the transparency Web site and make the site easier to use, bringing it up to the standard established by other Transparency 2.0 states.

· Add corporate tax subsidies – California should incorporate information on tax subsidies for corporations into its transparency Web site, including the names of the corporations that benefit, the intent of the subsidies, and a measure of whether the subsidy was successful. 

· Include contracts from all agencies – California should require all agencies to report expenditures on the transparency Web site, including independent authorities.

· Include the purposes of contracts - It should be possible to search for all of the money the state spent for particular purposes, from employee healthcare to office supplies. At minimum, a sentence or two describing the purpose of each contract should be included; ideally, a PDF of the actual contract would also be available online.

· Improve browsing functions – Contracts should be organized into common-sense categories, rather than provided as full lists, and it should be easy to sort the lists by any category.

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