Tennessee is one of four states to receive an “A” in budget transparency, according to The Volcker Alliance’s annual Truth and Integrity in State Budgeting report.
The third annual report covers fiscal years 2017 through 2019 and grades all 50 states in five budgeting areas: budget forecasting, budget maneuvers, legacy costs, reserve funds and budget transparency. States received grades of A to D-minus for each category. Each grade reflects the state’s three-year average for each budgeting area.
Alaska, California and Hawaii joined Tennessee in receiving an “A” for budget transparency.
“They were the only ones providing information on deferred infrastructure maintenance costs to the public for all three years of the evaluation period,” the report said. “Disclosure of such infrastructure data is critical to assessing spending needs and balancing a budget.”
According to the report, Tennessee’s budget website was consolidated and provided debt tables and comprehensive tax expenditure reports.
Tennessee also received an “A” in budget maneuvers and reserve funds.
“The state’s ‘A’ average in budget maneuvers reflected a lack of reliance on one-time revenue measures to achieve balanced budgets,” the report said. “It also averaged an ‘A’ in reserve funds. … Tennessee maintains limits on the use of assets in its reserve for revenue fluctuations. It also links deposits to historical revenue volatility, adding at least 10 percent of estimated growth over the previous year in general-fund and education-trust-fund revenues. The reserve is capped at 8 percent of those funds’ total revenues.”
Tennessee’s lowest graded were a “B” in legacy costs and a “C” in budget forecasting.
“Its revenue and expenditure projections cover only the current and upcoming budget year, which falls short of the three-year minimum outlook for full forecasting credit,” the report said.
The report recommended states adopt the modified accrual form of budgetary accounting to maintain better records, rather than a cash-based method. This method would account for future obligations, rather than only accounting for transactions that have already occurred.
The nonpartisan, nonprofit Volcker Alliance works to advance effective management of government. It’s named after its founder, former Federal Reserve Chairman Paul Volcker.
