Update: On June 4 the State Budget Committee selected Deloitte from 10 companies to conduct the audit. The cost of the audit is not yet known as it will be conducted on an hourly fee basis. No timeline was set by the committee, but it is expected to be finished by the end of the year.More details on what the audit will include>>
The State Budget Committee is gearing up for their next meeting in Vincennes to hear presentations from numerous departments on their fiscal standing. Among other topics, the committee is expected to review and discuss the independent audit of the Indiana Department of Revenue proposed by Senate Democrats earlier this year.
The audit, which comes on the heels of multiple fiscal blunders by the Daniels administration, seeks to remedy past errors and unearth any future mistakes. The initial two mistakes occurred within the IDOR and following multiple calls to action, Senate Democrats secured the commitment to review the policies and procedures of the department at an early April State Budget Committee meeting.
Following the April meeting, two more fiscal issues came to head; An April excise tax distribution error by the Office of the Auditor followed by the discovery of late fees charged to several departments under the Daniels administration. In total, over $527 million has been mismanaged on a statewide level.
Senate Democrats have repeatedly called for more legislative oversight and a wider audit of the state’s fiscal condition as the 2013 Budget Session grows nearer.
The State Budget Committee met on Friday to discuss the follow up on the $320 million in misplaced corporate tax revenue and the recent discovery of $206 million mistakenly withheld from local governments across the state. State Senator Karen Tallian (D-Portage) offered a motion to increase oversight and transparency and restore a system of checks and balances within state fiscal matters. Despite objections to Senate Democrats call for an independent audit last December, the proposal was met with unanimous and bi-partisan approval.
Sen. Tallian expressed disappointment that it took a second multi-million dollar error however she said she is happy the legislature is finally stepping up and taking the action Hoosiers expect.
“Legislative leaders have come around to the idea of an independent audit, but we need to make it a reality before the next budget cycle,” said Sen. Tallian. “This isn’t money between the cushions; we’re talking about over a half billion dollars in mishandled taxpayer money.”
Sen. Tallian’s proposal is a response to last week’s Indiana Department of Revenue announcement that $206 million in state revenue had been mistakenly withheld from Indiana counties. The department claimed the hundreds of millions of dollars in oversight was the result of a programming error and that immediate action would be taken to repay counties with interest. The latest mistake comes five months after Democrats called for an independent audit to determine the cause and impact of the mishandling of $320 million in state funds.
“Last year, our call for an independent audit was shirked off twice as unnecessary,” said Sen. Tallian. “This new agreement is imperative to determining how these errors went undiscovered for so long. “
On Friday, Democrats again called for legislative oversight proposing clear steps to be taken by the committee and outlined what the audit should entail.
LISTEN to Sen. Tallian’s comments from the meeting:
SEN. TALLIAN: “I think we need to send someone back with a clear message that we want an outside auditor…”
LENGTH: (00:42)
The first portion of the proposal aims to scrutinize the technological basis of how the state collects revenue. Programming and data collection would undergo extensive examination to confirm that revenue is being accurately accounted for. The second part of the audit would ensure that the Department of Revenue maintains best practices when interpreting revenue data and would review internal policies and procedures.
“This audit is to make absolutely clear that we’ve turned over every rock, confirmed every account to demonstrate to the public that there will not be an error of this magnitude again,” remarked Tallian. “It’s about restoring the public’s trust in state government.”
Members of the committee suggested that additional hearings should be held by the Interim Commision on Tax and Financing Policy to further discuss the impact of the under-distribution of the Local Option Income Tax revenue to local governments. The State Budget Committee is expected to meet again in May.
The Indiana Department of Revenue (DOR) announced today that $206 million in state revenue had been mistakenly withheld from Indiana counties, dating back to 2011. The department claimed the hundreds of millions of dollars in oversight was the result of a “programming error” and that immediate action will be taken to repay counties with interest. DOR Commissioner John Eckart also announced he plans to resign from his position and said that an independent audit will be necessary. This most recent “programming error” combined with the discovery of $320 million in misplaced funds in December pushed the total amount of state revenue mishandled by the administration to over half a billion dollars.
Democrat leadership reacts
Indiana Senate Democratic Leader Vi Simpson and House Minority Leader B. Patrick Bauer released a joint statement this morning expressing their frustration and disappointment over the avoidable $206 million mishap.
Senator John Broden echoed Leader Bauer and Sen. Simpson’s comments, noting that local governments had to make difficult budgetary decisions and as a result of the misinformation, may have made unneeded cuts to public safety.
SEN. BRODEN: “Several months ago, I along with others called for an independent and bi-partisan audit…”
(Length: 00:32)
State’s first mishandling of revenue
The Indiana Senate and House Democrats jointly called for an independent investigation four months prior to today’s incident after the administration announced it had “discovered” $320 million in state revenue that was unaccounted for.
At that time, Sen. Broden believed the only way to guarantee that the mishandled $320 million was in fact a onetime occurrence was to initiate an outside audit. Broden and members of both the House and Senate Democrats’ budgetary committees wrote to State Budget Committee chairmen Jeff Espich (R-Uniondale) and Luke Kenley (R-Noblesville) requesting they approve an independent audit.
The independent audit was rejected and the responsibility for a review of the state’s finances fell to the State Board of Accounts, the agency under which the original $320 million error had occurred.
The State Budget Committee met on Wednesday and Republican members twice rejected a motion by State Senator John Broden (D-South Bend) calling for an independent audit of how $320 million was misplaced for over five years. The misplaced funds have sat unaccounted for in a Dept. of Revenue account since FY2007.
Senator John Broden (D-South Bend) and Representative Scott Pelath (D-Michigan City) held a joint news conference today requesting that the State Budget Committee direct an independent audit into the recent discovery of $320 million in unaccounted for state funds. Sen. Broden and Rep. Pelath say an independent audit is needed to restore creditability in the state’s accounting and budgeting practices and to ensure to the public that a similar error won’t happen again.
Sen. Broden and Rep. Pelath were joined by Sen. Tim Skinner (D-Terre Haute), Rep. William Crawford (D-Indianapolis) and Rep. Cherrish Pryor (D-Indianapolis) on a letter to the Republican leaders of the State Budget Committee asking that the matter be added to the agenda of the Committee’s next meeting, Wednesday , December 14.
Copy of the letter sent to Rep. Jeff Espich (R-Uniondale) and Sen. Luke Kenley (R-Noblesville):
