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gntroduction "unif All of the 7:5 cities we analyze have balanced budget requirements,which are in place to assert future financial€fiffii<utties and to enhance accountability-As the Gawernmental Accounting Standards linaffI (GASS)points out, the ,retfuiremenis are"to requimi financing and slxcnding practice;that c tmblr° governmental entities to avoid financial difficulty and to livq within their mans," AwAher objec#ive of ba landed budget requirements is accountability;elected officials should be accountable I'm ihr,tax dollars they sfwnd.F wnwr U.S.Trearsury caff-rc:iat Fra4 Gwanaugh said it biest,'Polliticians should not have ilie pleasure of spending(getting woes)without the pain of'taxing(bring vvtest,k By de4i nit iorl, if as city has a balanced budw r"uirertwi, then"ndFng should nm exceed eatried rev&oue brotiglrt in during a specific year, balanced hudget rrerluireroterrts arcz meant preventelecW officials from shifting theburden of payingforcurreni-yelrservices onto(uture-year laxpa)Trs. So how can cities claim their budgets are balanced while our re#0rt AKm,s marry of them are in debt?The answer is in The accounting tricks used io calculate budgets. Municipalities balance budgets by using accounting tricks such as the(ollawing: s Inflating revenue assumptions * Count!ng borrowed money as income Undersiating the true costs of government + Delaying the payment of current bills until the start of the next fiscal year so they aren't included in the cal€ularions The mast comrmin accounting trick cities use is to hide-employee benefits such as healthcare, life insurance, and pensions,from the current budgeting process by not acknowledging they exist.Cities become obligated to pay fcxr these benefits as employees earn therm_Although these rc.Mirement benefits will not be paid until the emplcx}m retire,they still represent current compensation costs because they were earned and incurred thnoughout the empleq*0 tenon Furthernvwe,that dinnisey mum be pal into the refire-ment fund to acc uinu late+investment earnings_Unfortunately,some etected officials have used portions of the nxis y (3%VLXi to txtnsion and OFEB funds in k-%-p tam low and pity far politically fx-)pularr programs. Instead of funding promised benefits now,they have been charged to future laxp Ayers.shifting these,payments to future taxpayers allows the budget to appear balanced while city debt is increasing, verrrments are able to accumulate debt While c:ta inning halantwf I I srid gets h ausi?the Vast makttity of buclfwts are prq)ared on the cash-basis.This is an aatklUatekf acroarntin,method chat includes cash inflows, including Wo prod as revenue, and otgi<lowt—in[3ther wrartt , frnly CheelC%+Wit#er1. Wv rvi-ommend FACT-based budgeting and acc auiting,which stands for(till accrual taltufatians and techniques.tFACV.FACTS budgeting and acamnling turves bey cl cash-basis to provide More n0ijb[e and truthful budgeting and financial reporting€k curnents. This is the motivation and foundation for the norapartisara mission of TIA:to educate and empower citizens with understandable, reliable,and tramparent government financial information.TIA is a 501Icl(3)nonprofit, nonpartisan orgaoisitian composed cd business, community,and academic leaders interested in improving government financial reporting.TiA makes no policy recommendations beyond improvements(0 budgeting arid accounting practices that will enhance the public's understanding of governmeot finances, ,MMCPAIMI, 10