Report:

Transparency.gov 2.0

Using the Internet for Budget Transparency to Increase Accountability, Efficiency and Taxpayer Confidence
Released by: OSPIRG Foundation

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 19 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.

Given Oregon’s reputation as an innovator of ways to increase public participation in government, one might expect the state to be a leader in using the Internet for online budget transparency.  And indeed, pockets of budget transparency are sprinkled throughout Oregon Government.  But as more and more states upgrade their transparency systems, Oregon has fallen behind the emerging set of Transparency 2.0 best practices. 

In light of both a staggering budget shortfall and an unprecedented windfall of federal stimulus funds, OSPIRG reviewed how Oregon could catch up to other states in using the Internet for public budget transparency to increase accountability, efficiency and improve taxpayer confidence.  We found that Oregon is far behind many other states; but that significant benefits could be achieved through relatively easy-to-implement reforms that should cost little to no additional funds. 

This report makes the case that 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 Oregon 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 –  Three-quarters of voters (76%) believe that “creating a national website where citizens can see what companies and government agencies are getting the funds, for what purposes, and the number and quality of jobs being created or saved” would have an important impact on the impact of the Federal stimulus package, including 39% who believe its impact would be extremely important. Support for state transparency websites to monitor recovery funds received almost equally high marks, again from Republicans, independents and Democrats: Fully 75% of American voters said creating state level websites to track funds was “important,” and 34% said it was “very important.”

 

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 – The 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. 

 

Oregon can become a leader of the Transparency 2.0 movement

Good first steps, but much room for improvement

Contracts – The Oregon Procurement Information Network (ORPIN) website allows citizens to examine many statewide contracts.  However, only some contracts are included, data is often incomplete, and the tool is designed for contractors, not the public, making it difficult for the public to use.

Tax expenditures – The Department of Revenue’s website hosts an annual (non-searchable) Tax Expenditure Report (TER) about the amount of revenue forgone by the state as a result of different programs that grant tax exemptions, tax credit, or other tax preferences.  However, the reports do not identify company-specific tax breaks and other subsidy programs, do not contain any evaluation of the effectiveness of tax programs, and information is not in a searchable database, making it difficult for taxpayers to easily find the information they want or spot trends over time.

Good lobbying and campaign contribution transparency needs to be linked – Oregon ORESTAR program already offers good transparency websites about lobbying and campaign contributions.  Integrating this information for entities that are awarded state contracts will be a useful check to ensure contracts are not provided as rewards or political favors.

Information is scattered – Oregon 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 Oregonians with one-stop transparency.

 

New federal reporting requirements make this an opportune time to upgrade to Transparency 2.0

The federal stimulus package includes language that requires all recipients (including states) of recovery funds from a federal agency to report quarterly detailed information about how the funds are spent, consistent with the reporting standards of the Federal Funding Accountability and Transparency Act of 2006 (FFATA). 

Since Oregon will already have to comply with the (stricter) federal transparency standards for federal recovery funds, it should broaden those standards for all state and local spending.

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