Generally, tax timing differences are accounted for in the effective tax rate, while permanent tax differences are accounted for in the balance sheet, right? (as opposed to the other way around)

I'd say it's the other way 'round. Timing diffs give rise to deferred tax assets and liabilities on the balance sheet -- they are a result of reporting income and/or deductions in different years for book purposes vs. tax purposes.

Permanent diffs, though, create an effective tax rate that's different than the actual tax rate. Suppose, e.g. that every year I have net profits of $100, the tax rate is 5%, and every year my profits include $20 of municipal bond interest.

Thus my taxable income is 80 bucks each year, and ergo my annual tax bill is $4. This gives me an effective tax rate of 4% on my total net income.