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NTU Testifies on Maryland HB 358
February 6, 2008
Testimony of Kristina Rasmussen
Chairman Hammen and Members of the Committee, my name is Kristina Rasmussen. I am Director of Government Affairs for the National Taxpayers Union (NTU), a grassroots lobbying organization of taxpayers with 362,000 members nationwide, including 7,100 in Maryland. I encourage you to find out more about NTU on our website: www.ntu.org.
I offer this testimony in support of Delegate Warren Miller's "Maryland Funding Accountability and Transparency Act" (HB 358). This measure would direct the Department of Budget and Management to create a public website that allows users to search for information regarding state funding distributed to non-state entities. This bill, largely fashioned after the federal database launched last year at www.USASpending.gov, is based on the widely understood and sensible principle that transparency of, and public access to, government information is vital to the health of our political system.
NTU believes that providing an easy-to-use tool like the searchable database proposed in HB 358 would better enable state residents to make sense of how their tax dollars are being parceled out. Timely access to this information is crucial for helping taxpayers make their own evaluations of spending priorities in Annapolis, and this bill deserves equally timely passage through the House of Delegates.
The Maryland Funding Accountability and Transparency Act already has an impressive lineage, owing to a nearly identical grant and contract website bill that was signed into federal law in 2006. Thanks to the bipartisan efforts of Senator Tom Coburn (R-OK) and Senator Barack Obama (D-IL), the general public now has access to a searchable online database that helps track the flow of hundreds of billions of dollars in federal grant and contract expenditures.
Historically, information on federal spending via grants and contracts had been spread across innumerable agencies, frequently lacked specificity, and was not always available to the public. Senators Coburn and Obama set out to change this by sponsoring the Federal Funding Accountability and Transparency Act of 2006 (S. 2590). Upon its introduction, the bill immediately drew praise from policy advocates across the opinion spectrum and from grassroots activists across the country.
In fact, NTU helped to put together a coalition of over 110 supporters that ranged from the U.S. Public Interest Research Group and the Project on Government Oversight to the Maryland Taxpayers Association and the Council for Citizens Against Government Waste. The ideological diversity among the bill's supporters lent credence to the words of Senator Obama when he noted, "whether you're on the left or right, there is no worthy argument against transparency." Congress and the President agreed, and S. 2590 became law in September 2006.
The www.USASpending.gov portal was launched in December 2007, and Americans now have access to the following information for each federal transaction over $25,000:
HB 358 would offer similar access to Maryland residents for state expenditures. The legislation requires the Department of Budget and Management to develop a single website by January 1, 2009 that is searchable by the public at no cost. The database would contain information on state financial assistance or expenditures (such as grants, loans, awards, cooperative agreements, contracts, and purchase orders) given to non-state recipients (such as for-profit and non-profit corporations, associations, partnerships, and other legal business entities as well as grantees and contractors).
The database would start tracking grants and contracts for Fiscal Year 2009. Along with aggregate totals given to any entity, the website would provide the following information:
Funds transferred from one agency to another would not be included in the database, nor would information related to state employee salaries or state or federal assistance given to individuals. Additionally, anything considered confidential by state or federal law would be exempt. Currently, HB 358 calls for exempting all expenditures under $25,000 from the database, the same amount as the federal exemption limit. I strongly recommend that you significantly lower or remove the exemption limit altogether, as the resulting database would be far more useful to taxpayers.
By acting now, Maryland has the opportunity to join other state leaders in making government spending information more readily available to the public.
After working to secure the federal grant and contract website, NTU launched the "Show Me the Spending Coalition" to advance the concept at the state level. Since the debut of the Coalition's project (www.showmethespending.org), nine states have created online spending databases for their residents, including Hawaii, Kansas, Minnesota, Missouri, Nebraska, New York, Oklahoma, South Carolina, and Texas. State leaders have utilized a variety of routes to enact these websites, including legislation, executive orders, and treasurer initiative. Because creating a database via legislation is a lasting solution, we're happy to see Maryland move forward with HB 358.
While Maryland residents can access limited state grant and contract information at this time, existing resources are not designed to serve a broad constituency. Currently, the public can find copies of "Blanket Purchase Orders" (which contain pricing information) on the Department of General Services' website, and a contract library is available via the Department of Budget and Management's website. However, these sites are mainly tailored to procurement purposes. Likewise, the Governor's Grants Office links to a database maintained by the Department of Planning that provides information on more than 700 state aid programs from over 70 different state agencies. This database is geared toward grant-seekers, not those who would wish to examine past awards.
This focus on procurement and promotion of grant opportunities is reflected in other states' online databases as well, which may be an outgrowth of administrators trying to serve immediate consumers (e.g., contractors and researchers) as opposed to the taxpaying public. A nationwide review NTU conducted in 2006 found that while more than a dozen states have limited versions of disclosure websites for grants and/or contracts, more often than not, they are designed to advertise funding or list contracting opportunities, rather than invite oversight. While this decentralized arrangement might benefit researchers and contractors, most Marylanders are still waiting for a one-stop web page that will allow them to easily access state spending information.
Creating a citizen-friendly expenditure website would entail a very modest cost, but it would greatly increase transparency in the distribution of precious tax dollars and help hold all elected officials accountable for their budget spending. We believe that it is possible to create a state spending database in a fiscally responsible manner.
I'd like to offer some perspectives on what resources a spending website might require. At the state level, Missouri created an online database using existing funds and personnel. Oklahoma passed legislation calling for a website that includes a wide range of expenditures, and its Office of State Finance estimates that fully implementing this spending database would cost up to $300,000 ($40,000 in initial outlays with future expenses of $245,000-$260,000).
Tennessee officials had concerns that their state's current accounting software could not interface with a spending website without a costly upgrade. In turn, we pointed out that it is possible to collect spending information through other methods. West Virginia, for example, requires state agencies to submit grant information to a central database, while North Carolina requires grant recipients to provide relevant data via reports. Kansas is spending $40 million to replace the state's entire accounting system and is using the opportunity to incorporate a spending website in the overhaul plan. According to an article from www.stateline.org, only a small fraction of that $40 million will be used to "include a site for the public to see how taxpayers' dollars are spent."
On the federal level, the Congressional Budget Office estimated that implementation of the grant and contract website in the Coburn-Obama bill would cost about $4 million initially in 2007 and about $15 million more over the 2007-2011 period.
The bottom line is that there are ways to make spending information available to taxpayers without consuming excessive outlays in the process. We are ready to work with you to craft low-cost, high-impact solutions for promoting spending transparency.
Thank you, Chairman Hammen, for allowing me to submit this testimony. And again, on behalf of our 7,100 Maryland members, NTU is pleased to offer active advice and assistance as the Committee and the entire House of Delegates work to enact this vital measure.