Fiscal First Aid


Human Resources and Benefits

Underfund Accrued Liabilities like Pensions. Government can use its resources to fund current obligations, rather than to fund future obligations. For example, pension contribution “holidays” can preserve cash, but will likely have significant long-term costs because the foregone investment income will likely be severe given depressed stock market levels and the lost opportunity to “buy low.” 



  • This is a way of sticking tomorrow’s generations with today’s tab.
  • This can create negative repercussions on bond ratings, public perception, and employee relations as well as large liabilities in a closer future than expected.

New Normal Retirement Plan Designs ” by Girard Miller and Jim Link

Fiscal First Aid Quick Reference: Underfund Accrued Liabilities like Pensions” 


Capital and Debt

Shift Operational Costs into Capital Budgets. Governments can inflate the budgets of capital projects to carry operating and maintenance costs for a time.



  • This distorts the true cost of capital investments and makes government vulnerable to unsustainable operating and maintenance costs when the capital financial runs out.
  • This is nominally not permitted under some state’s legislation that requires operating expenses to be paid from operating revenue. Persisting in this practice endangers the organization’s credibility and its ability to return to good practices in the future.

 “Fiscal First Aid Quick Reference: Shifting Operational Costs into Capital Budgets

Management Practices


Use Accounting Manipulations. Accounting practices can be manipulated to disguise the true nature and magnitude of the problem. Examples include delaying deliveries, payrolls, and payments to the next fiscal year, estimation/forecast manipulation or distortion, or recognizing anticipated (or even worse, speculative) savings or revenues.



  • This only makes the problem worse by creating a culture of unaccountability and delaying recognition of the problem.
  • “Accuracy above Balance” is the fundamental rule of budgeting. If the budget is balanced but not accurate, it is not balanced!
  • Future credibility and ability to manage is greatly damaged by the fact that information is false or misleading or even by the perception of intentionally being misinformed.
  • Condoning the use of accounting manipulations is a possible first step towards deeper corruption and malfeasance.