California Gov. Gavin Newsom vetoed a bill that would have set up a commission to study whether to require state and local governments and agencies to provide financial documents to the state controller’s office in a more readily searchable format than the PDF.
Newsom’s veto of Senate Bill 598 posted Oct. 12 along with a flurry of other veto-pen victims just a day before his final signing deadline for the session.
The
The bill was modified in committee to establish an Open Financial Statement Commission within the State Treasurer’s Office to study adoption of XBRL and report its findings to the Legislature. In its original form, the bill would have moved straight to implementation.
“Although improving public agencies' financial reporting processes for transparency is vital, this bill imposes additional unbudgeted costs for the state and contains implementation provisions that are problematic,” Newsom wrote in his veto message.
The governor’s office didn’t respond to a request for insight as to the extent of the additional costs or which implementation provisions the governor found objectionable.
The bill
State Treasurer Fiona Ma supported the bill, writing in a letter that XBRL has been adopted by the Securities and Exchange Commission for corporations. It would help local governments, private analysts and the public “better track taxpayer dollars by switching to a system that is more accessible, efficient, and user-friendly,” Ma wrote.
Marc Joffe, a senior policy analyst with the Reason Foundation, who worked with bill sponsor Sen. John Moorlach, R-Costa Mesa, on the legislation, said “nothing is absolutely free,” but the cost to study implementing XBRL was de minimis. Even in the original version of the bill that included the cost to implement the bill, he said, the estimated cost was around $1 million.
It might have been a case of poor timing, Joffe said, because the Legislature approved the bill after the budget, so perhaps the governor didn’t want to approve anything that added additional costs after that juncture.
“What the bill does is just set up a commission and Treasurer Fiona Ma was willing to take it on and underwrite the cost of the committee in her budget,” Moorlach said. “There might be a cost if you implement it, but the standard isn’t expensive and the technology is being used by the SEC, so I’m trying to figure out where the cost is there.”
Moorlach said he was surprised that the tech-friendly governor, who penned “
“He put $40 million in the budget to deal with digital innovations,” Moorlach said. “This would have run parallel to what he was trying to do. The veto just really caught us off guard.”
The cost to implement XBRL shouldn’t be prohibitive, Moorlach said, because CPAs are already creating PDFs for issuers. They could just create the information in XBRL, he said.
Moorlach compiles a report annually that culls information from the audited statements of the state’s 940 school districts to determine the extent of their long-term liabilities including pensions. “With XBRL, instead of spending months accumulating that data, we could do it in seconds,” he said.
Moorlach hasn’t met with staff about his plans for next year yet, so he couldn't say one way or another whether he will reintroduce the bill in January.
