Riley: Providence Receives “F” in National Report
Wednesday, January 31, 2018
Because government financial statements do not report all liabilities, elected officials and citizens are making financial decisions without knowing the true financial condition of their government.
The lack of accuracy and transparency in government accounting prevents even an experienced user of government financial documents from understanding and evaluating a public-sector entity’s financial health.
Truth in Accounting (TIA) believes it is imperative to provide an honest accounting of each city's financial condition.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTTherefore, we developed a sophisticated model to analyze all the assets and liabilities of the nation's 75 most populous cities, including unreported liabilities.
This is the second year TIA has released an annual FSOC study, documenting the truth about each city’s financial position.
Providence Rhode Island
The report issued last week by Truth-in-Accounting did not include Providence because it is not one of the most populous cities in America (it’s around 174th). However, Providence is one of the most debt-burdened cities in the United States and is ranked in the top 5 worst for honest accounting and taxpayer burden.
We had a separate study done for Providence 3 months ago in order to inform Rhode Island citizens and government officials just how bad things are. Providence's taxpayer burden was only worse than Chicago, Illinois, and New York City. Per citizens, the burden sits at $34,200.
Why should we care as citizens?
Providence Mayor Elorza and Cicilline and Taveras before him are famous for passing on the lies to the next administration. Mr. Elorza has been notoriously slippery about true pension costs and what he plans to do about them annually issuing misleading numbers to municipal bondholders. But even if Providence achieves 8% compounded returns Elorza has no chance of achieving even 50% over the next decade and that’s a very sad statement.
Truth in Accounting delineates why all citizens in every State should care:
A lack of transparency in government finance leads to the following problems:
- Accounting tricks allow elected officials to claim balanced budgets, giving residents a false sense of security, while cities sink further into debt.
- Residents do not know the true cost of their city government, and elected officials are able to spend amounts larger than the city’s revenues.
- Complex pension systems, which both citizens and elected officials have difficulty understanding, rack up massive debts, putting cities further in the red.
- Voters re-elect leaders based on false claims that budgets were balanced.
- Elected officials create and continue new programs and increased services without knowing the true cost of government spending.
- Our representative form of government is undermined because citizens become cynical and do not trust their governments.
There has been no leadership on the issue of a bankrupt Providence and their phony budget and we are headed straight into a state taxpayer-funded bailout. Raimondo and Elorza should both be blamed for being silent and not acting.
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
Related Slideshow: GoLocal: Benchmark Poll, October 2017
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