If there is one thing most Americans can agree on, it is
that the quality of their government is bad and getting worse
except maybe it isnt, at least at the state
level. Statehouses have acted decisively on budgetary
discipline while Washington dithers, shrinking aggregate
deficits from $191 billion in the 2010 fiscal year to a
projected $47 billion for FY 2013,
according to the Center for Budget and Policy
States are also in the midst of a governance and
transparency revolution. That is the upshot of an annual survey
on online access to public spending released last week by the
U.S. Public Interest Research Group (U.S. PIRG). All but four
of the 50 statehouses now offer easily navigable web sites
where concerned citizens can monitor outlays down to the
check-book level, up from 32 in 2010, the
D.C.-based watchdog found. We were impressed to see the
progress over the past few years, says Phineas Baxandall,
the USPIRG analyst who ran the project.
The relative rankings of the states, which U.S.
PIRG graded pedantically at A through F, also turned out
to be encouragingly unpredictable. Republican and Democratic
administrations were equally likely to be stars or dropouts.
States with backwater reputations like Kentucky and West
Virginia were among the A students, while supposed bastions of
advancement like Wisconsin and Vermont both earned D-minuses.
Texas was valedictorian with a grade of 98, though more thanks
to independently elected comptroller Susan Combs than its
famous governor Rick Perry, Baxandall says.
How relevant are these findings on transparency to bond
investors? A bit, market pros say. Governance accounts for
fully 30 percent of a states credit rating, says Emily
Raimes, an analyst with Moodys. But the agency looks at
top-down best practices such as whether budgets and audits are
delivered on time, as well as initiatives and referendums
that might interfere with the budgeting process. (Take
that, California.) Transparency is not a part of
governance that impacts ratings, she says.
Indeed, U.S. PIRGs idea of virtue does not correlate
with that of the ratings agencies. Iowa, which failed U.S.
PIRGs transparency test altogether, gets an AAA credit
rating from Moodys, while public access avatars such as
Kentucky and Louisiana receive much weaker Aa2s.