Making Financial Transparency Pay Off

July 1, 2015 – Mike McCann


Citizens in the age of e-government are insisting on easier and faster access to government data at the federal, state and local levels.  Constituents who are long accustomed to receiving news and information in user-friendly digital formats now expect the same from their government.

Civic leaders are responding, especially when it comes to financial transparency. By 2013, all 50 states developed public websites showing expenditure data. Municipalities, counties, school systems and special districts are placing their budget and other data online.

But for budget transparency efforts to build trust, governments must do more than upload static PDF files to a website or post raw data files online. They must make budget data accessible, anchor it in relevant context, and apply it to important policy decisions.

Make All Data Accessible
The first step in building constituent trust is providing all stakeholders universal access to government data. Don’t make citizens hunt for information. Don’t make them rely on open record, right-to-know or freedom of information laws. These are reactive forms of communication that require substantial staff time to fulfill.

Instead, proactively share data with stakeholders and make it easy for them to understand it. It saves staff time in the long run, provides citizens with the information they want and demonstrates commitment to accountability. After Palo Alto, California placed its budget data online in a user-friendly format, city staff spent 50 percent less time responding to information requests since citizens were able to answer their own questions online.

Universal access also creates a level playing field when internal staff, elected officials and constituents come together to discuss policy. Instead of wasting time with back-and forth information requests, stakeholders can dive into substantive policy questions.

Provide Context
Civic leaders transform raw data into meaningful information by providing context. Instead of just telling constituents, “Police spending last year was $10 million,” demonstrate how that amount compares to previous years’ spending. Explain the rationale for why funding has changed (or not). Benchmark your city’s police spending against that of other cities of similar size or in close geographic proximity.

Visual representations of the data also help viewers understand how seemingly disparate elements connect together. For example, show how total revenues compare to total expenses and show how it breaks down by fund, department or priority area. A city that does this particularly well is Anaheim, California. Anaheim’s budget portal allows citizens to view how spending tracks with strategic priorities that were previously established during the city’s budget planning process.

Apply Data to Policy Decisions
Many governments have observed a decline in public trust and engagement in recent years. According to a 2012 survey, over two-thirds of local officials in California view the public as largely uninformed and increasingly distrustful of local government. I am sure these views are not unique to California government managers.

Citizens do not trust what they cannot understand. Impenetrable budget documents stifle civic engagement. Constituents do not have time to become policy experts in all of the pressing issues that governments face. It behooves governments to provide constituents the background they need to actively participate in local democracy.

For example, do not just notify citizens of a proposed tax levy. Explain how the increment will be used. Is the tax increase funding a new or existing program? What will be the consequences if the new tax is not approved? Will the government need to pursue debt financing instead? How much would alternative financing cost taxpayers in the long run?

Fiscal transparency creates a virtuous cycle for government leaders. Transparent governments experience greater civic participation, higher voter turnout and higher approval ratings. They also enjoy greater fiscal flexibility. If citizens know that their money is being stewarded responsibly, they are more willing to support government expansion to fund new public projects or to eliminate fiscal imbalances.

But, for transparency efforts to pay-off, governments must provide citizens with information that is timely, accessible, placed in context and applicable to current policy decisions.

About the Author: Mike McCann is Vice President and Subject Matter Expert at OpenGov. He previously served as the finance director of Ukiah, California and as the assistant finance director of Monterey, California.

Category: Government Finance