Fiscal transparency for financial aid?
Should the federal funds being used to boost US state and local budgets after a steep Covid-19-induced decline be dependent on better transparency?
The Securities and Exchange Commission (SEC) expressly lacks the authority to regulate state and local disclosures – which is partly why municipal disclosure practices fall far short of those enforced in corporate securities markets.
Marc Joffee and Jonathan Bydlak recently argued in the Washington Examiner that in exchange for further relief funding states should have to brush up their reporting, with the increased transparency intended to encourage fiscal responsibility during the pandemic and beyond.
Municipal financial data in the US suffers from inconsistent and infrequent financial statements. For example, average municipal bond issuers only report annually, and then take more than six months to do so.
Where statements are regularly filed, they are generally voluminous, opaque, and inconsistently formatted PDFs. For states to be reporting such difficult to use data more than a decade after the SEC embraced machine-readable XBRL standards demonstrates a clear need for municipal disclosures to catch up – could conditions for the pandemic-bailouts be the right impetus?
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