Open Government

WPC's Center for Government Reform's mission is to partner with stakeholders and citizens to work toward a government focused on its core functions while improving its transparency, accountability, performance, and effectiveness for taxpayers.

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State Auditor asks Governor to veto performance audit changes

May 5, 2009 in Blog

The State Auditor's Office sent Governor Gregoire a letter yesterday
formally requesting that she veto changes in the budget to the
performance audit program. Here is the Auditor's letter in full:

Dear Governor Gregoire:

I am writing to respectfully request your veto of Section 124 (3) of the state operating
budget and to encourage you to work with state lawmakers to restore at least $14
million of the $29 million in performance audit funding being taken from the State
Auditor's budget over the next two years.

As passed, Section 124 (3) of this budget violates government auditing standards, as
explained in the attached letters. This section should be vetoed for that reason alone.
Additionally, enacting this budget into law could have far-reaching consequences, such
as affecting this state's ability to properly account for billions of dollars in American
Recovery and Reinvestment Act money that wil!
l be so important in getting the state's
families and economy back on their feet. Comprehensive oversight of these dollars is
absolutely critical.

Section 124 (3) also sets up a perverse relationship between our Office and state
agencies. Tying our performance audit dollars to actual cost-savings by agencies
deeply compromises agencies' perception of our objectivity and independence.
Regarding funding for performance audits, I wish to re-emphasize that taking away
nearly three-quarters of our budget for that work decimates a program Washington
citizens made very clear they wanted when they approved Initiative 900.

The size of the reduction also impedes efforts we agreed to undertake on a statewide
performance review that we hope will be another step in bringing about true, meaningful
reform of state government. With your advocacy and support, we have been putting
together a plan for this review !
and we remain committed to producing recommendations
to s!
ave money, to streamline operations and to eliminate duplication and outdated
programs.

The $15 million we agreed to have the Legislature sweep from our current performance
audit fund balance would have reduced that budget by about 50 percent, but it was
similar to fund balance sweeps at other agencies, As passed by the Legislature, the
budget reflected a 73 percent cut ($29 million) in our performance audit funds.

We also are disappointed at the Legislature's failure to recognize that our 15 completed
audits identified nearly $500 million in cost savings and unnecessary spending for state
government alone. Considering the cost to conduct those audits, we have achieved a
10-to-1 return on investment.

We remain committed to helping you provide oversight over the stimulus funding and
set state government on a leaner, more effective path for the future and again, request
a veto of Section 124 and!
restoration of at least $14 million to our performance audit
funding.

Sincerely,

BRIAN SONNTAG
STATE AUDITOR

Included as attachments were the following letters explaining how the performance audit proviso violates auditing standards:

Additional Information
Will veto restore performance audit funding? 

Will veto restore performance audit funding?

April 29, 2009 in Blog

Despite the State Auditor’s willingness to share in the budget pain, lawmakers went a step further and raided $29 million from the dedicated performance audit account (a 74% reduction in available funds). This is the account voters created in 2005 when 57% approved independent performance audit authority for the State Auditor. This will leave approximately $10 million in the performance audit account. By contrast, the State Auditor spent $16 million from this account during the current biennium.

The raiding of the performance audit program brought the following rebuke from the State Auditor who sent this letter on April 24 to House Speaker Frank Chopp (in-part):

“The section that sweeps away most of our performance audit funding is ridiculous and offensive both to us and to citizens. The cuts are unacceptab!
le and will severely undercut our ability to do independent performance audits . . . I am deeply disappointed in the way the budget process has worked this year. The lack of clear, on-going communication with your members regarding our budget has led to confusion and, now, this unacceptable budget proposal.”

This wasn’t the first time the State Auditor expressed outrage at the legislative attacks on performance audit funding.

On March 31, the Auditor testified before the Senate Ways and Means Committee saying (in-part):

“It is unacceptable to me. It is unacceptable to citizens who in such a time as this look to us more than ever to ensure that government is accountable and transparent. They recognize this Office is uniquely positioned to be part of the refor!
m the governance change that everybody talks about and wants.&!
#0160;    

What particularly disappoints me is that the effects of this budget come at a time when our Office is looked upon to be part of the solution. Every discussion we’ve had with legislative leadership and the Governor centered on how we can help bring about meaningful, cost-saving government reform.

We’ve already got several performance audits underway with the intent to identify immediate cost savings as well as long-term efficiencies.

We also have launched a statewide performance review, which we were called upon to do by the Governor. It will focus exclusively on state government, its governance structure and back-office functions such as information technology and leasing office space. Many in the Legislature recognize its potential.

Just like successful performance reviews in other states and nationally, we’re going into it with the full intention of finding and recommending significant !
spending reductions and proposed ways to reshape and recreate what state government does and how state government does it.”

Ultimately the State Auditor’s pleas fell on deaf legislative ears. But there is still one more chance for performance audits and their potential to help the state down the path of government reform -- the Governor’s veto pen should she choose to wield it to restore the performance audit funding.

Governor's email to state employees on budget

April 28, 2009 in Blog

Here is the full email the Governor sent state employees yesterday (emphasis added):

Dear Fellow State Employee:

As you know, we just finished perhaps the toughest legislative session since the Great Depression.  There may be a special session to complete a handful of items, but the truly heavy lifting is done including passage of the operating budget.

I know the last months have been hard for you and your families too.  There is uncertainty about the future of programs to which you have dedicated your working life, as well as uncertainty about your own future.

Although overall budget uncertainty has ended, there is still a lot of hard work ahead as our agencies absorb and manage their way through budget cuts to balance a $9 billion shortfall.  It is up to us to make this budget work as best we can!

All of us, as a team, must carry out the work ahead with g!
reat sensitivity and care.  I know this is not just a budget document.  It’s about all of you, the families who depend on you, and the citizens we all came to serve.

In the weeks, months and years ahead, all Washingtonians will feel the impacts of the hard decisions the Legislature made – and we are now required to make along with nearly every other state – after the mortgage and financial markets set off the Great Recession we find ourselves in.

You are the men and women who will connect with Washingtonians at very important and personal levels – explaining, helping us set priorities, and serving wisely and compassionately.

This will be hard work, and your skills will be sorely tested.  For example, programs and services may need to be adjusted to accommodate significant reductions in “administrative” spending of about $255 million, which means fewer people to deliver services. 

Meanwhile, the!
budget calls for difficult personal adjustments.  For i!
nstance, we may be asking employees to take unpaid furloughs to save jobs and money.  The funding for our health-care benefits is not sufficient to cover health-care inflation, so we may pay higher co-pays.

Amid these difficult changes, I ask that we continue – and strengthen – the partnership we forged last year when you helped me implement vital budget reductions to better position ourselves for the challenges to come.  Imagine the budget we would have if we had failed to take early action to save money.

I continue to need your skill and creativity to reform and improve how we serve our citizens.  Reform of state government is not only the right thing to do – it’s now absolutely necessary.  We are going to have to reinvent what we do and how we do it, and you have the ideas that can work.

I want and need your ideas. You are the people on the ground, and I can’t do this without you.  !
Please respond to this e-mail, as you did last summer and fall, to share your input.

I’ll close with optimism.

I sense a change in this country that bodes well for us and for society as a whole.  After years of pursuing other, more financially “lucrative” careers, more college graduates are showing renewed interest in public service.  There is a new generation that wants to serve as much as we do.  There is a new respect building for the work we do – which is to serve the greater good.  What we do does matter.  What we do builds the future.

So let’s renew the commitments that brought us to state service in the first place – to serve for the good of our communities.  I’m counting on you, and so are the people of this great state.

Thank you, Chris

Meanwhile the Washington Federation of State Employees put out this summary for its members an!
d noted: ". . . your ongoing step increases remain. The Senate on Saturday night defeated an amendment proposed by Sen. Joseph Zarelli that would have blocked step increases. So if you're eligible for step increases, you will continue to get them."

Step increases are pay raises for individuals that move up the state salary grid; these are different than across the board pay raises.

Additional Information
Whatever happened to government reform?

$270 million in tax and fee increases estimated for 2009-11

April 24, 2009 in Blog

The Office of Financial Management just issued the I-960 tax and fee impact statement for the version of the budget that passed the Senate Ways and Means Committee.

2009-11 impact: Minimum of $270 million in tax and fee increases.

Not included are some higher education fees: "All other fees imposed by institutions of higher education are as of now indeterminate. SSB 5600 gives authority to institutions of higher education to set other fees, but any fee increases have yet to be determined and approved by governing boards of public baccalaureate institutions."

Details here.

UPDATED: Lawmakers to State Auditor: You don't really need performance audit funding, do you?

April 24, 2009 in Blog

Holy smoke!

I'm reading through the just released state budget compromise and one clear loser is the State Auditor. It appears lawmakers didn't take too kindly to his complaint about their raids on the dedicated performance audit funding authorized by voters.

Consider Section 805: It raids $29 million of the performance audit funds. The original House budget took $12 million; The original Senate budget $15 million. Looks like the compromise response to the Auditor's complaints was to combine the money raided.

Unfortunately for the State Auditor the hits in this budget just keep coming.

  • Section 124 (3) appears to set up a bounty for audit savings. I.E. - Auditor can have some of the money back for any savings implemented as a result of performance audits: "It is the intent of the legislature to reduce the 2009-11 legislative transfers from the performance audits of government accounts to recognize actual reductions achieved in expenditures from the state treasury as a result of these performance audits."
  • Section 927 (2) limits number of audits the State Auditor can do of local governments: ". . . the state auditor shall conduct audits no more often than once every two years of local governments with annual general fund revenues of ten million dollars or less and no findings of impropriety for the three-year period immediately preceding the audit period."
  • Section 928 reduces the amount the State Auditor can charge local governments for their audits: ". . . the state auditor shall reduce the municipal revolving account charges for financial audits performed on local governments by five percent."

I wonder if the State Auditor is now considering changing the "incomplete grade" he gave lawmakers in this TVW interview yesterday to "failing."

UPDATED: The State Auditor just sent over this letter to House Speaker Chopp expressing his disappointment with the proposed budget.

Also, according to legislative sources the raids on the I-900 funds aren't doubled by the proposed budget - the $29 million taken from the performance audit account is the same as in earlier budget versions but is occurring in a different way.

Either way the State Auditor is very unhappy with the budget proposal as evidenced by his letter.

Viaduct: I have altered the deal. Pray I don't alter it any further!

April 24, 2009 in Blog

Did you know the deep bore tunnel reduces capacity from the current six lane configuration to just four lanes? This is not a "replacement" of the viaduct, but rather a reduction in service.

And in classic government fashion, taxpayers will have to pay more for it. Just like Vader's deal to Lando Calrissian, the deal given to taxpayers just keeps getting worse.

State Auditor on "Reinventing Government"

April 23, 2009 in Blog

State Auditor Brian Sonntag was a guest today on Inside Olympia. The interview focused on the theme of reinventing government. Among the topics discussed:

  • Legislative action or inaction on reforms
  • Auditor's budget
  • Statewide performance review
  • Why the auditor doesn't issue press releases
  • I-900 and Tim Eyman
  • Legislative detractors of audits
  • Sonntag's participation at the anti-tax rally on April 15

Here is the video:

Additional Inform!
ation
Whatever happened to government reform?
State Auditor fights performance audit cuts

Lawmakers answer questions about sales tax increase

April 23, 2009 in Blog

TVW's The Impact last night had an insightful exchange between two lawmakers on the proposed sales tax increase. Here is the video:

Additional Information
"Responsible cuts" or "People will die"?
Details on sales tax increase proposal

Missouri looks to reform tax system by eliminating income taxes

April 22, 2009 in Blog

The talk about how adopting an income tax is the answer to the state's budget woes must be news to states like California that already have high income taxes and large budget deficits.

Despite this fact you can bet that you'll hear that argument made at the hearing later this week to enact a state income tax.

I wonder what the income tax advocates think about this news coming out of Missouri. According to the Tax Foundation:

Missouri lawmakers are considering a drastic change to their tax system. A bill recently passed by the state’s House of Representatives would allow residents to vote on a Constitutional amendment that would eliminate corporate and individual income taxes in the state and replace them with a broad based sale!
s tax. The plan is essentially a state version of the national FairTax proposal popular with some grassroots groups that would replace the federal income tax with a national sales tax. If the Senate passes the bill Missouri residents would be voting on the amendment in November of 2010.

Missouri currently has a sales tax, a corporate income tax, and a personal income tax. The sales tax rate is 4.225%, and the top corporate and personal tax rates are 6.25% and 6%, respectively. The plan put forth would replace all those taxes with a single sales tax levied at a rate of 5.11%. Accompanying the sales tax rate hike would be a substantially broadened sales tax base that would include all purchases. Currently most services are tax exempt and certain goods, most notably groceries, are taxed at a reduced rate of 1.225%. These exemptions would not exist under the new tax structure.

The overhaul of the tax system is meant to be revenue neutral. In other words, t!
he revenue from the sales tax increase and broadening of the t!
ax base is meant to exactly offset the elimination of income taxes.

Regardless of how you slice up a state's taxes, there is no such thing as a recession proof tax structure. For budget peace of mind states need to use a “three-legged stool” of sound budgeting:

  • Meaningful spending limit;
  • Protected 10% reserve account (so you don’t have to resort to tax increases or deep spending cuts in the bad times); and
  • Limiting base expenditures to core functions within the revenue forecast when in the good times.

WA stimulus spending: what about reducing traffic?

April 21, 2009 in Blog

If you care about reducing traffic, then you may question how Washington policymakers propose to spend our portion of the $5 billion in stimulus funding.

In order for the various state and local agencies to receive funds, the governor must "certify" the project. In the process, the governor says each project "has received the full review and vetting required by law and that [she] accept[s] responsibility that such investment is an appropriate use of taxpayer dollars."

The governor has certified 212 transportation projects for about $622 million in federal stimulus spending.

We could argue all day long about the appropriateness of some of these projects. But ever since the governor's Blue Ribbon Commission on Transportation identified about $150 bill!
ion in unmet transportation infrastructure needs, some of these certified projects may raise your eyebrows.

Island Co Bicycle Touring Enhancement
Produce a map identifying bicycle touring routes on both
Whidbey and Camano Islands. Improve shoulders along
approximately 1400' of Crescent Harbor Road in front of
Crescent Harbor Elementary School. Sign the route from
Deception Pass Bridge to the City of Oak Harbor as a "Bike
Route".  $53,329

Lummi Nation Pedestrian Path
Construct approximately 9000 LF of a shared bicycle pedestrian
trail between Kwina road and Slater road east of
Haxton way. $250,000

West Dayton Street Beautification
This enhancement project will add vegetation and an
irrigation system to the West entrance into the City of
Dayton along US 12.  $149,000!

Beards Hollow Overlook
Design an!
d construct beach/ocean overlook at Beards
Hollow on SR Loop 100.  $100,000

LINK Transit
Upgrade shop lighting Upgrade shop lighting.  $50,000

In fact, I went through the list and found about $9.8 million dedicated to sidewalks, $4.7 million for trails, and whopping $77.7 million earmarked for vehicle replacement. Funding is the single largest obstacle in building/maintaining transportation projects, especially at the local level. With population projections expected to reach an additional 1.2 million people and traffic congestion expected to double over the next twenty years, could we not have found more important projects?