State Spending Transparency

Testimony of Elizabeth Bryan to the Pennsylvania House Republican Policy Committee, June 18, 2009

Good morning, I am Elizabeth Bryan, a research associate with the Commonwealth Foundation, a free-market public policy research and education institution based in Harrisburg; I am joined by Nathan Benefield, who is our Director of Policy Research.  I want to thank Chairman Saylor and the members of this committee for allowing us to testify on this very important issue.

Need for Greater Spending Transparency
 
Pennsylvania needs greater transparency in how taxpayer money is spent. Creating an online database to track all of the state’s spending is key to spending reforms; it allows every citizen to become a government watchdog and see for himself how government money is being spent. It’s inexcusable, particularly in our current economic environment, for lawmakers to deny Pennsylvanians the cost-saving tool available to taxpayers in more than 20 other states.
 
A single website containing state spending data would benefit not only taxpayers, but also elected officials.  The current debate over the state budget is indicative of the need for greater spending transparency.  While both Democrats and Republicans offer rhetoric about “draconian” cuts or wasteful spending, it is difficult for the average citizen—even for the media, watchdog groups, or rank and file lawmakers—to evaluate this claim.
 
The information Pennsylvanians can currently find online is inadequate. While the Treasurer's contract database and other state transparency efforts are worthy efforts, they are insufficient.  The state Treasury Department’s website is limited to information on state contracts, and even that is difficult to navigate if a user is not searching for a specific vendor.  
 
Currently, legislators are hard pressed to identify the programs and line items that are ineffective or duplicate other efforts.  Aggregating all spending information into one public database would help legislators and staff, media, and the public to identify exactly what line items are funding. A clear connection between appropriations and actual services allows citizens to track the results and successes of government initiatives. At the same time policymakers would be incentivized to carefully consider each and every vote for additional spending, dampening the tendency to do something regardless of the actual results.  
 
Take an innocuous-sounding program from the budget, like "Economic Advancement" in the Department of Community and Economic Development. It received $17 million in state funding last year. Governor Rendell has proposed cutting it in half, and the Senate Budget eliminated the line item.  What does this fund?  It’s impossible to tell using current sources—it isn't listed as a program in the DCED "Investment Tracker".  Are there contracts for these funds?  Doubtful, and even so, who is willing to browse through the 772 pages of 7,722 DCED contracts on the Treasurer's site?
 
We believe the public should be able to easily find any grant, contract, or expenditure of tax dollars on a single searchable database, including all aspects of government spending.
 
Spending Transparency: Low Cost, Big Savings
 
Transparency is not a partisan issue, it is simply good government.  In 2006, then-Senator Barack Obama co-sponsored federal legislation to create USAspending.gov with Republican Senator Tom Coburn. Since that time, governors and state legislators of both parties have supported transparency legislation.
 
Last month, Pennsylvania Senate Democrats claimed such a database would cost $7 million to create and $1 million to maintain every year after.  This claim is preposterous, as it ignores the experience of both the federal spending database and those in other states.
 
The Mercatus Center at George Mason University studied ten recently launched transparency databases and found the average cost to be $140,000.  Most states overestimated the cost of creating and maintaining a database. To date, the most expensive of these online spending databases was Texas’, which was completed for $310,000.  Georgia, Illinois, Louisiana, Maryland, Missouri, Rhode Island, South Carolina, South Dakota, and West Virginia all created databases from existing resources, meaning no new appropriations were necessary.  Even the federal database at USAspending.gov cost less than $1 million to create.
 
However, it’s not just the low cost that makes transparency worthwhile, it’s the savings that result from increased efficiency.  Spending transparency would allow lawmakers and citizen-watchdogs to identify and eliminate wasteful and duplicative spending.  It would reduce the amount of staff time and printing costs to fulfill Open Records requests.  And it could produce savings in state contracts.  The advantages of an open government are numerous and can be created for a low cost relative to the savings generated.
 
South Carolina’s Comptroller General has already seen the number of freedom of information requests decrease since launching a spending transparency website. The Texas Comptroller estimates transparency efforts have already saved the Lone Star state $5 million, with more savings to be realized in the future. She stated: “A closer look at our contracts for toner cartridges revealed a simpler and smarter way to consolidate purchases through one contract, rather than through multiple vendors. Getting a discount for volume saved us more than 20 percent, for a total of $73,000 on that one item.” Watchdogs using the Missouri Accountability Portal found the State spending $1.6 million at coffee shops, $387,000 at framing stores, $78,000 at florists and nurseries, and $70,800 at donut shops from 2000 to 2008.
 
Let me also suggest some improvements to the current proposals for state spending transparency being considered, and suggest building a comprehensive spending web portal.  Folding current efforts, such as DCED’s information on grants and the Treasurer’s contracts database, into the new spending database would save money and provide greater information.  Including information on state employees’ salaries—such as legislation by Sen. Dominic Pileggi would do—in this transparency portal would offer more openness in Pennsylvania government. Allowing school districts and local governments to use this same technology to provide the same level of transparency to their constituents would go a long way to improving transparency in government spending.
 
The advantages of an open government are numerous:

• Spending databases can be created at little or no cost to taxpayers;
• Transparency is a means for rebuilding trust and a good management tool to prevent future abuses;
• An online database could decrease the amount of paperwork for government employees;
• Posting grants and government contracts in an accessible format can foster competition, leading to a more efficient use of state money;
• Transparency allows citizens to track how successful government initiatives are and critically evaluate performance results for individual expenditures.
• Rather than partisan rhetoric, political gamesmanship, and closed-door negotiations, Pennsylvanians deserve an open budget process.  It’s time lawmakers let the taxpayers know how their money is being spent.

Thank you for the opportunity to offer our thoughts on this issue.  We look forward to taking any questions you may have.

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Elizabeth Bryan is a research associate at the Commonwealth Foundation (www.CommonwealthFoundation.org), a public policy education and research institute located in Harrisburg.