State, County and Local Govenment Hide Trillions(Vanity)

1/11/03 | abigkahuna

[abigkahuna]

Since we are not allowed to post any articles from Rense.com, ( I suppose for good reason), I thought I would post the gist of this article for your consumption--especially in light of California's and other states' ficsal problems'

In the article (http//:www.rense.com/politics2/hidetrill/htm), Walter Burien writes that local governments have two sets of books. The second set is know as CAFR. These assets number in the trillions. For California it numbered 3 trillion as of 1999.

Thus the question is begged, if states, counties, etc have these "hidden" monies from investments, etc, why are we being soaked for additional taxes, etc.

If the above link does not work, go to rense.com and under search type in CAFR, up will pop a number of articles on the subject.

I think this is a topic worthy of our discussion both amongst ourselves and with our elected leaders. (providing of course Mr. Burien's supposition is correct.)

abigkahuna

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[umgud]

Why can't govt's sell assets such as land to raise cash. There is too much gov't owned land anyway.

[Numbers Guy]

Thus the question is begged, if states, counties, etc have these "hidden" monies from investments, etc, why are we being soaked for additional taxes, etc.

The largest portion of such funds are pension funds to pay future pension obligations, that's why those dollars are tied up in investments.

Remember those stories about the Teamsters Union diverting pension funds to pay for projects for their cronies? The people who did that ended up in prison, as would any state official who robbed a pension fund to pay for whatever pet project Rense wants him to pay for.

The idea that these are some top-secret funds is pretty laughable. Any ongoing concern, whether public (a government) or private (a corporation or union) has pension funds into which dollars are invested.

Now perhaps one might argue that companies and governments shouldn't maintain pension funds, but once people start suing to ensure that the pension they're legally entitled to is paid, you're going to be right back where you started from.

That doesn't mean that governments aren't squirreling away funds. The problem is that the author refuses to distinguish between funds which any employer paying a pension is legally obligated to operate (and protect), like a pension fund, and other slush funds which may be tapped. A very sloppy article.

[abigkahuna]

well, I think some of the "numbers" Burien is seeing might well be earmarked for pensions, etc. Let me go back and find the website he uses for his information.

[anniegetyourgun]

They can....but don't.

[Numbers Guy]

Let me go back and find the website he uses for his information.

Thanks.

Another example I remembered: Many states now have tax-free pre-paid tuition plans. You can sign up, invest $X each year, and the state treasurer manages the investment, then when your kid goes to school you can get the lump sum to pay for tuition.

Those types of funds are state-controlled and would show up on a CAFR. Now does anyone seriously think that the state should liquidate such funds, which represent investments by individual citizens, and use them to pay for government expenses? There was an outcry after Enron, what will happen when a state takes people's college fund away from them?

[abigkahuna]

I typed in carf under my webtv search and came up with numerous sites. the first is www.cafrman.com/ from there you can check out your particular states' listing.

As of 2001, California had a 73 billion dollar surplus accordning to the site. I did not check to see if pension funds were included in that figure or not.

Assuming penions are not included and the downturn in the state's investments, California would still have an "off the books" surplus totalling billions. Perhaps enough to forestall the billions of taxes the governor is calling for---

[Numbers Guy]

Thanks for the link.

Looking at my state (Michigan), the surpluses column (as opposed to the assets column) doesn't include any pension funds.

The problem is that a lot of the surpluses shown are artifacts of cash vs. accrual accounting. For instance, a cash general fund surplus of $1.38 billion in FY 2000-2001 just isn't the case if you use accrual accounting (which is the correct type to use). Similarly, cash surpluses in various other accounts are meaningless if the money is already obligated to be spent down the road (road repairs, environmental cleanup, etc). If it costs $1,000,000 to clean up a site and you've committed to it, but have only done $50,000 of work so far, on a cash basis you've spent $50,000 and have a surplus of $950,000. On an accrual basis you have no surplus.

That doesn't mean there aren't funds that have more money than their obligations: In Michigan the unemployment compensation fund had cash assets of over $3 billion, and that led to a move to reduce unemployment taxes paid by businesses and to increase benefits.

Again, there is some wheat among this chaff. What the author really needs to do is examine specific instances (such as the unemployment example above) to find realistic areas where one can generate revenue and reduce costs and taxes.

What's also interesting is that one could examine the books of any corporation on a cash basis and find similar "surpluses" that wouldn't necessarily mean anything.

[Quix]

I guess I'm behind the times and very out of the loop.

I realize Rense.com has a lot of . . . . very strange sorts of docs . . . is there a ban on posting from Rense.com really?

Why?

Are there other sites we can't post from? Where's the list?