Transparency, Governance, and Civic Engagement: Governments Are Increasingly Involving the Public in the Entire Budget Process, Using Citizens More Effectively in Setting Priorities and Overseeing Results

By Hoene, Christopher | The Public Manager, Spring 2009 | Go to article overview

Transparency, Governance, and Civic Engagement: Governments Are Increasingly Involving the Public in the Entire Budget Process, Using Citizens More Effectively in Setting Priorities and Overseeing Results


Hoene, Christopher, The Public Manager


I come from an academic background and thought of myself as a researcher. However, over time my work has drawn me into the policy world, which happens when one stays in Washington long enough. Policy is important, and straddling the research and policy worlds has been exciting. My work involves the policy positions that the National League of Cities takes on federal issues. Perhaps more important is my work on research and training concerning "best practices" for local government.

Our Public Finance System

It's not enough to just consider transparency in a budgeting sense. Planning and setting priorities, and then making the budget fit accordingly, is more important. Our system of public finance is broken. We're making choices about services that everybody needs using revenue and finance mechanisms based on nineteenth and twentieth century economies. We're in a twenty-first century economy that is creating wealth in many new and different ways, such as the Internet, but we are not figuring out how to tap that wealth and make it contribute equitably.

Thus, we face a major challenge in making our economy and fiscal system fit a bit better. The inescapable conclusion is that reform is needed, and it is coming whether we like it or not. The choices ahead of us concern the types of planning we do for that: whether we make choices in small increments to put the crisis off or prepare the public and our governments to be ready for what's coming.

Reform is difficult, however, because talking about government and taxes is only acceptable in this country if you are opposed to both. Consequently, the big issue, this negative national condition, is the place where transparency and issues of trust and governance are central. Various national polling agencies have shown that since the early 1970s trust in government has been on a steep decline and has now leveled off at historically low levels. The larger challenge that this lack of trust has for governments is that it undermines the system. For local governments, an ongoing tax revolt against property taxes has devastated the primary source of local government revenue. For example, we are at a point where forty-five or forty-six states have limited local governments' ability to use the property tax to balance their budgets, reflecting how the lack of trust is hampering government activities.

On the surface, transparency seems a fairly benign issue, which is usually presented as an antidote to the trust problem. However, we often approach the issue from the wrong direction. Most of the work on transparency concerns the mechanics of budgeting and finance, in particular financial reporting and standards and measures. This only makes accounting more transparent to other accountants. It has little to do with the national problem concerning the discourse about government and taxes.

Revenue Sources

We also emphasize the revenue side of the equation: where governments get their money. Here, the role of transparency becomes somewhat convoluted. Revenue sources are usually evaluated on a series of criteria: efficiency, adequacy of providing revenues, administrative ease, fairness, and the simplicity of the source. Transparency can add another dimension that is sometimes problematic. For example, a sales tax is much easier to administer than a property tax, which is much more burdensome. Local governments have to assess property and then deal with appeals, and this costs them money, time, and effort. The sales tax is paid on the site where we purchase something, and the businesses remit it to government. It's much simpler and less costly to administer than a property tax.

Consequently, the sales tax wins out for administrative efficiency, but the property tax wins out for transparency because the taxpayer gets a bill once or twice a year and knows what is paid. Nobody really adds up the sales tax we pay for a year. Competing principles make it hard to choose among revenue sources, in terms of which is best. …

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