Increasing Fiscal Transparency by Tracking, Reporting on Unspent Funds

John Reitmeyer | June 22, 2017 | Budget
Bipartisan effort would keep tabs on money allocated to programs and endeavors that is sometimes left to languish in various state accounts

While Democratic legislative leaders are negotiating a budget with Gov. Chris Christie this week, lawmakers are also moving toward final passage of a bipartisan bill that would bring a new level of transparency to how taxpayer dollars are spent by state government each year.

Both houses of the Legislature are expected to approve later today a measure that would increase budget transparency by requiring a new report to be prepared each year to detail any funds appropriated for a specific purpose by the Legislature but left unspent by the executive branch.

Sponsors of the bill say it is designed to give taxpayers more assurances that their funds are being spent appropriately, and not just left sitting in an easily overlooked departmental account.

Annual report

The legislation calls for the annual report on unspent account balances to be drafted by the Legislature’s Office of the State Auditor, which already conducts a close review of state spending each year. It’s modeled on a similar report that is required by law to be prepared in New Mexico, the sponsors said.

Whether Christie, a second-term Republican who is in his final year in office, will sign the bill remains to be seen. Christie and Democratic legislative leaders are negotiating the school-funding plan this week as they also seek to work out a bipartisan deal on a new state budget. Under the state constitution, a balanced budget must be in place when the new fiscal year begins on July 1. But Christie — who will leave office in early January thanks to constitutional term limits — may find some comfort in the language of the bill seeking the report on unspent account balances; it calls for the first summary to come out after his term ends in January 2018.

Each year state lawmakers hold a series of public hearings as the annual budget comes together, taking time to closely review agency spending requests and other departmental accounts. But once a budget is signed into law, there’s often little attention paid to exactly how the funds are spent throughout the year.

Budget shortfalls

In recent years, however, the Christie administration has brought new attention to unspent account balances thanks to a series of sizable projected budget shortfalls that have opened in the final weeks of the fiscal year. The latest gap, which was revealed just last month by the Christie administration, measured [link:|$527 million.

To close the shortfalls, the administration’s remedies have often involved a reallocation of unspent funds from various accounts, a budget adjustment traditionally referred to as a lapse. But there have also been concerns raised in recent years by members of the legislative budget committees about whether the state should do a better job of forecasting departmental spending needs in the first place. They’ve also questioned the Christie administration for its repeated diversion of funds that have been earmarked by law for a specific purpose, like the state Clean Energy Fund but then ultimately used by the administration to fund other priorities, or to help close the budget shortfalls.

The bill calling for the annual report on unspent account balances would by law require the executive branch to disclose any unspent funds in any state agency account. The legislation also calls for the report on unspent balances to include a summary of exactly how much is left unspent by the state on an annual basis.

Setting a schedule

The report would be required to be issued every year within 30 days of the release of the state’s annual financial report, and it would also have to include recommendations from the state auditor on ways to address any accumulation of funds going forward to prevent “waste, mismanagement, inefficiency, or fraud.”

The bill passed the Assembly by a 73-0 margin last year, but the Senate Budget and Appropriations Committee approved some minor amendments earlier this month. The new version of the bill includes those amendments and is now up for final passage in both the Assembly and Senate during voting sessions that are scheduled to be held in both houses this afternoon.

“When a unit of government says it needs a certain amount of money but then doesn’t use it, it raises concerns about whether projects and programs are being adequately funded,” said Assemblyman Eric Houghtaling (D-Monmouth) after the measure cleared the Senate Budget and Appropriations Committee earlier this month.

“If there are funds idling in a government account, the state ought to examine why that is and perhaps seek more efficient ways to use them in the future,” said Houghtaling, a primary sponsor of the bill.

“Taxpayers rightfully expect that their money will fund things like education and infrastructure, not just accumulate in a government account,” Assemblywoman Joann Downey (D-Monmouth) said.

“An annual report on unspent account balances will foster transparency and help New Jersey use funds more efficiently,” said Downey, who is also a primary sponsor of the bill.