Six Hidden Benefits of Financial Transparency

April 22, 2016 – Brandon Camhi


It’s a leap forward for citizens and the governments that serve them.

Government financial transparency is sweeping the globe. Every state runs a data portal and over 1,400+ governments publicly share financial information on the OpenGov NetworkTM. Legislatures around the country are mandating new transparency programs. A focus on building citizen trust in these initiatives is critical because governments spend taxpayers’ money.

However, your organization can earn additional benefits from your transparency program if you structure it properly. Here are six more advantages beyond building public trust:

1. Support difficult conversations

Public trust enables tough conversations. Leaders can educate citizens and interest groups about budgetary tradeoffs and decisions, promote tax changes or bond issues, and advocate for ‘rainy day’ and infrastructure replacement reserves. By pointing constituents to transparency sites full of compelling visualizations and annotations, governments can better engage citizens.

For example, the City of Stanton, CA recently passed a one-cent sales tax to hire new deputies. Stanton uses OpenGov to inform the public how the city spends the money to maintain support for the tax.


2. Improve labor negotiations

You expect disagreements during labor negotiations. But discussions often languish in requests for financial information and disputes over facts and assumptions. You can solve this problem, helping both sides along the way.

Financial transparency initiatives that present current and historical data reduce the need to comb through CAFRs, budgets, and personnel reports or query enterprise systems for data. The narratives on your transparency site explain the numbers so everyone can work from the same set of facts.

The City of Sausalito, CA has used OpenGov to get all sides on the same page during labor negotiations and ensure a productive conversation. The Finance Director shared budgets and the city’s Long-Term Financial Plan on OpenGov, giving labor representatives easy access to and understanding of financial information. He also used OpenGov to share a personnel report broken down by bargaining unit.


3. Lower municipal borrowing costs

A 2011 Brookings Institute study found that state and local governments may be paying billions each year in unnecessary fees, transaction costs, and interest expenditures – potentially north of $30 billion. These elevated costs partially stem from huge barriers to accessing real-time financial information. Government financial information is decentralized, often outdated, and buried in cumbersome PDFs and spreadsheets.

Information access is different in the private sector. Investors and traders can easily pull up years of financial information and real-time updates for publicly traded companies. Online transparency sites help bridge this gap. As more governments share and contextualize data in machine readable formats, the transaction costs in the municipal debt market may decline. And your transparency site can even lead to better credit ratings – the City of Simi Valley, CA used OpenGov to help obtain a AAA score from Standard and Poor’s.

4. Obtain better vendor prices

The State of Ohio powers its online checkbook with OpenGov. Many municipal governments in the state load online transactions into a searchable public site. Local government leaders report using this information to see what other governments pay for services, giving them leverage in contract negotiations – knowledge is power. Governments can also foster price competition among vendors: public payment information lets vendors see what governments are paying competitors and investigate cheaper alternatives. It is no coincidence that a major study of state transparency site gave Ohio one of just five A+ ratings.


5. Provide context for press

Your government touches areas the press love to write about such as public safety and infrastructure. Transparency sites with intuitive and interactive charts and tables give press the information they need to write accurate stories and citizens the information to contextualize reports.

6. Engage and inform the business community

Businesses need critical infrastructure and stable tax policies. A well-designed transparency site helps communicate capital project budgets with current and potential businesses, showing how the government is investing in the community’s future success. Long-term financial plans and annual budgets share the government’s expectations for growth, economic development, and support for the business community, including expected tax policies.

Interested in launching a transparency initiative that enables these and other benefits? Check out our complimentary Administrator’s Guide to Financial Transparency.

Category: Government Finance