Using The Internet For Budget Transparency To Increase Accountability, Efficiency And Taxpayer Confidence

This report makes the case that in the course of upgrading government IT systems we must seize the opportunity to catch up with a nationwide movement of state and local government to en­hance budget transparency and thereby increase efficiency, accountability, and public trust.

MASSPIRG Education Fund

The ability to see how government uses the pub­lic purse is fundamental to democracy. Budget transparency checks corruption, bolsters public confidence in government, and promotes fiscal responsibility.

In the private sector, internet search technology has revolutionized the accessibility and trans­parency of information. We take for granted the ability to track deliveries online, to check cell phone minutes and compare real estate on the Web, even to summon—at the click of a mouse—satellite and street-level views of any address. But until recently, when it came to tracking government expenditures online, we were left in the dark.

State governments across the country are changing that. A growing number of states are using powerful Internet search technology to make budget transparency more accessible than ever before. Legislation and executive orders around the country are lifting the elec­tronic veil on where tax dollars go. At least 18 states currently mandate that citizens be able to access a searchable online database of govern­ment expenditures. These states have come to define “Transparency 2.0”—a new standard of comprehensive, one-stop, one-click budget ac­countability and accessibility.

Massachusetts, consistently ranked as a top state for technology industries, should be a natural leader of the Transparency 2.0 movement. But as more and more states upgrade their trans­parency systems, Massachusetts has fallen be­hind the emerging set of best practices.

In anticipation of the state administration’s plans to significantly overhaul and improve the quality of the state’s Information Technology (IT) capabilities, MASSPIRG reviewed how the Commonwealth could catch up to other states in using the Internet for public budget trans­parency to increase accountability, efficiency and improve taxpayer confidence. We find that Massachusetts is far behind many other states; but that significant benefits could be achieved through relatively easy-to-implement reforms.

In August of 2008, the Office of Information and Technology posted for public comment a draft vision and plan for updating state government’s information technology in ways that will improve residents’ quality of life. The Governor and the Office of Information Technology deserve praise for their commitment to make government more accessible through this three-year plan laid out in the IT vision. The legislature wisely approved $500 million towards achieving this vision in the Government Bond Bill on July 31st.

This report makes the case that in the course of upgrading government IT systems we must seize the opportunity to catch up with a nationwide movement of state and local government to en­hance budget transparency and thereby increase efficiency, accountability, and public trust. The report documents the accelerating trend toward budget Transparency 2.0 in other states. It exam­ines the benefits of this improved transparency, highlighting best practices and offering sugges­tions for how Massachusetts can catch up.

Nationally, The Movement Toward Government Budget Transparency 2.0 Is Broad, Bipartisan, And Popular

» A nationwide wave—In just the past two years, legislation and administrative rules in eighteen states have given citizens access to a searchable online database of government expenditures. State initiatives also mirror a new federal program.

» Bipartisan efforts—Transparency legislation has been championed by legislatures both Republican and Democratic, with federal legislation to strengthen web-based budget transparency cosponsored by Senator Mc­Cain (R-AZ) and Senator Obama (D-IL).

»  Large public support—More than 80 percent of Maryland citizens supported the creation of a budget transparency portal for their state, with similar support in Oklahoma.

Transparency 2.0 Saves Money And Bolsters Citizen Confidence

» Increased civic engagement—Citizens are ea­ger to use transparency websites. Houston officials report improved public confidence after the launch of their transparency web­site. The Missouri Accountability Portal re­ceived more than six million hits less than a year after its launch.

» Low cost—Budget transparency websites can be inexpensive to create and maintain. The federal transparency website, which allows citizens to search over $2 trillion in federal yearly spending, cost less than $1 million to create. Missouri’s website, which allows its citizens to search over $20 billion in state annual spending and is updated daily, was created with already-existing staff and ap­propriations.

» Big savings—Transparency websites can save millions through more efficient government operations, fewer information requests, more competitive contracting bids, and lower risk of fraud. In Texas, the Comptroller reports $2.3 million in saving from more efficient government administration following the launch of their transparency website. Utah estimates millions in savings from reduced information requests. The largest savings may come from the deterrence of waste or abuse of public funds because public officials or contractors know that decisions are open to scrutiny.

» Better targeted expenditures—Transparency budget portals allow states to track how well subsidies and tax incentives deliver results. Funds from underperforming projects and programs can be reinvested in successful programs. By tracking the performance of state subsidies, Minnesota and Illinois in particular have both been able to recapture money from numerous projects that failed to deliver promised results. Agencies can also more efficiently achieve affirmative action goals by identifying leading depart­mental practices and contractors that ad­vance these goals.

» Better coordination of government con­tracts—Massachusetts’ State Purchasing Agent identifies four sources of savings for state procurement officers: sharing in­formation with other public purchasers on good deals; avoiding wasteful duplica­tion of bidding and contracting procedures through centralized processes; better en­forcement of favorable pricing and contract terms; and focusing on cost-cutting where greater resources are spent.

Other States Have Developed Best Practices

» Comprehensive—Leading states provide more comprehensive information on a broader range of expenditures, including contracts and subsidies with private parties.

» Minimal thresholds or delays—Disclose all expenditures big and small, direct and indirect, with information updated frequently.

» Local jurisdictions and authorities—Disclose spending by all government agencies and entities, including inde­pendent authorities and, increasingly, municipalities.

» Contracts—Disclose detailed informa­tion for each government contract, tracking the purpose and performance as well as spending on subcontractors.

» Subsidies—Disclose detailed informa­tion, including the purpose and out­come of each subsidy. Compile a uni­fied economic development budget to coordinate information about disparate programs. Link disclosure to automatic mechanisms to recapture subsidies if re­cipients don’t deliver on their promises.

» One-Stop—Leading states offer one central website where citizens can search all govern­ment expenditures. In many Transparency 1.0 states, a patchwork of disclosure laws provides information about government ex­penditures – if citizens know where to look. But citizens must access numerous websites, go to several agency offices, read through dense reports, make formal information re­quests, and figure out complex bureaucratic structures to ascertain what is and isn’t in­cluded. Transparency 2.0 states, by contrast, disclose all information about government expenditures on a single website, including comprehensive information about govern­ment contracts and subsidies.

» One Click Searchable—Commercial internet vendors know that a few extra clicks make it far less likely that users will get to their desti­nation. Leading states allow citizens both to browse broad, common-sense categories of government spending and to make directed keyword and field searches.

Massachusetts Can Become A Leader Of The Transparency 2.0 Movement

» Good first step on contracts—Massachusetts’s Comm-PASS website allows citizens to ex­amine many statewide contracts and some contracts from independent government authorities and local governments. However, only some contracts are included and data is often incomplete. The tool is not designed to enhance citizen oversight.

» Needs improvement on subsidy disclosure—Although Massachusetts’s economic devel­opment tax expenditures are expected to exceed a record $1.5 billion this year, the commonwealth currently tracks and dis­closes very incomplete information about subsidies.

» Lobbying and campaign contribution trans­parency needs to be linked—Massachusetts already offers better-than-average transpar­ency websites on lobbying and campaign contributions. Making it more user-friendly and integrating this information for entities that are awarded state contracts will be a useful check to ensure contracts are not pro­vided as rewards for political favors.

» Scattered—Massachusetts government spend­ing information is currently disclosed through a patchwork of websites and reports. Integrat­ing existing government expenditure informa­tion on a single central website will go a long way toward providing Massachusetts citizens with one-stop transparency.