The Government Accounting Standards Board has decided to begin requiring state and local governments to begin disclosing five year forecasts of revenue, expenses and other obligations, including debt service and pension costs. This decision was made as the recession and 2008 credit crisis exposed the vulnerability of municipalities as tax revenue faltered, pensions lost money and financial turmoil hit them with spiraling interest bills. The pressure has since left public officials struggling with budget deficits and raised concern about the ability of governments to pay their bills.
I believe this is a smart move as investors in state and local bonds deserve to know as much information as possible before they decide to put their money in the hands of the government. These projections should be fairly accurate as government revenue is generally predictable. Do you think governments should be forced to forecast five years into the future as part of their annual reports?