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All of the 7:5 cities we analyze have balanced budget requirements, which are in place lu assert future financial €lifficu[ties and to enhance accountability- As the Gawernrewntal Accounting Standards How fI (GASS) points out, the , rc-,tluiremenis are "to requimi financing and slxcnding practices that c tmblr° governmental entities to avoid financial difficulty and to livq within their mans," AwAher objective of ba landed budget requirements is accountability; elected officials should be accountal-)le frrr ihr, tax dollars they sswnd. Formv-r U.S, Treasury caff-rc.:iat Fra4 Gwanaugh said it hest' Politiciartis should not liovv ilie pleasure of spending (geiting woes) without the. pain of'taxing (bring vvtest,k By de4init iorl, if as city has a balanced but3w r"uirertwi, then sl ndFng should not exceed can *A revenue brotIgN in during a specific year, BI lanced hudget rrerluirenterrts are meant preventelecW officials from shifting theburden of payingforcuuent-yelrservices unto (uture-year laxpa)Trs. So how can cities claim their budgets are balanced while our r"rt 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 + Belaying the payment of current bills until the start of the next fiscal year so they aren't included in the catculations The mast cormn-wm 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 employms earn there_ Although these rc.Mirement benefits will not be paid until the emplcxym retire, they still represent current compensation costs because they were earned and incurred thn xighout the empleq*0 tenure, Furthermore, that vnni ey mum be pal init i the rulirument fund to acc urmu late investment earnings_ Unfortunately, some etected officials have used portions of the nxir y (3%VLXl to txtnsion and OFEB Binds in keep tam low and pity far politically fx-)pular programs. Instead of funding promised benefits now, they have been charged to future taxpayers, Shifting these payments to future taxpayers allows the budget to appear balanced while city debt is increasing, wernmen% are able to accumulate debt While c:ta iming halantwf I I srid gets h auu?. the Vast rriakttity of buclfwts are prepared on the cash -basis. This is an aatirtuaterf acroaintin, method chat includes cash inflows, including loan prod as revenue, and otgi<lowt—in [3t!roer wrartl , r�r4 CheelC% +Wilteri. Wv rvi-ommend FACT -based budgeting and accountinL& .which stands for (till accrual taltufatians a:rid techniques tFACTI. FACTS budVing and accounting turves beyond cash -basis to provide More n0ijbte and truthful budgeting and financial reporting €k curnents. This is the motivation and foundation for the rorapartisara mission of TIA: to educate and empower citizens with understandable, reliable, and tramparent gavennment 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 to budgeting and accounting practices that will enhance the public's understanding of gowrnmeot finances, ,MMCPAIMI, 12