Senate advances bill to align Utah financial reports with national accrual standards; sponsors warn paper gains aren’t budget dollars

Senators advanced Senate Bill 50 to the third-reading calendar after a floor explanation about a national shift in government accounting.

Sponsor Senator Lorraine McAllister told the Senate the change—driven by the Governmental Accounting Standards Board (GASB)—moves state annual reports from a modified accrual view toward a fuller accrual basis. "This provision will cause us to increase our revenue on 06/30/1990 by $65,000,000," McAllister said, adding that the bill also requires recognizing roughly $35,000,000 in liabilities and that the net effect is largely an accounting reclassification.

McAllister and other senators repeatedly drew a distinction between financial reporting and budgeting. "For budgeting purposes, it is our intent that we continue to use the cash basis," McAllister said, and she warned senators not to treat the newly reported accrual amounts as spendable. She said if lawmakers were to budget on the accrual-recognized amounts, "then we're gonna have to go out and borrow in order to have operating revenues." The sponsor further noted that implementation is national in scope for state and local governments and said the GASB implementation date is 1994.

Questions from senators focused on who sets the standards and the practical effects on bond ratings and audit opinions. McAllister described the standard-setting structure—the Financial Accounting Foundation and the GASB—and told senators that some other states were already in the process of adopting the same reporting approach. She said state auditors would likely flag noncompliance as an exception in an audit opinion, which could have rating implications.

The Senate adopted the committee report on SB 50 and later called the question for third reading; a roll call showed the bill advanced with 28 ayes and 1 recorded no.