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.
Indiana Senate Democrat Leader Vi Simpson (D-Ellettsville) released the following response to the recent investigation of late fees charged to several departments under the Daniels administration.
“With each new month another example of failed fiscal leadership is discovered. This is a trend that taxpayers cannot afford.
“The habitual mismanagement of millions of dollars of public funds is unacceptable and warrants serious investigation as well as increased legislative oversight.
“We secured a commitment to conduct an independent audit after the first three mistakes occurred. Unfortunately, the audit is limited to the Department of Revenue. It is obvious that the scope of the audit should be expanded to include all financial offices of state government as well as all payment processes. And we must move forward with that audit as swiftly as possible to uncover and resolve any other errors that might be on the horizon.
“New mistakes each month only hinder our ability to get back on track.
“This administration has cast itself as a paragon of fiscal responsibility. Episodes such as these diminish public confidence and make it more difficult for legislators to determine our true fiscal standing. The legislature has a responsibility to the people of Indiana to reconcile these errors before we begin another budget cycle.
“Republicans have continually said they want to address the ‘waste’ in government, but it seems they have instead created more waste of taxpayer money through these management mistakes.
“The governor says ‘paying bills early is the mismanagement of funds’. I strongly disagree. Paying bills on time works best for the millions of Hoosiers who try to avoid late fees and interest costs. And it works best for the hundreds of small business people who are waiting on the money owed to them by the State.”
This most recent fiscal blunder comes just weeks after an announcement of an April excise tax distribution error by the Office of the Auditor. That announcement was discovered after two additional major mistakes of fiscal mismanagement by the administration that involve more than a half billion dollars.
Following a motion made by Indiana Senate Democrats, the State Budget Committee unanimously agreed to begin the process of conducting an independent audit of the state’s fiscal practices.
Indiana House Democratic Leader B. Patrick Bauer and Indiana Senate Democratic Leader Vi Simpson today released the following statement on learning of the state’s latest mismanagement of taxpayer funds:
“It’s unfortunate that these announcements are becoming all too common. This marks the third instance of financial mismanagement by Republican officeholders in five months.
“With every accounting blunder, the administration continues to erode what confidence Hoosiers have in state government to manage Indiana’s finances responsibly.
“This is just another example of a system lacking thorough and comprehensive oversight.
“Hoosier taxpayers expect better. This latest flap only reinforces the need for both an exhaustive independent audit of the state’s accounting practices and additional oversight of all fiscal offices.
“The administration needs to act quickly to restore the public’s trust in state government. Hoosiers can’t wait any longer.
“We call on the administration to fast-track an independent audit and broaden the scope to all fiscal offices to ensure that local governments are given accurate, timely budgeting information.
“In addition, steps need to be taken to enhance legislative oversight and restore a system of checks and balances.
“These examples of fiscal mismanagement should serve as a clear indication that the legislature should be more involved in making certain the executive branch is properly managing the state’s finances.”
The comments from House Democratic Leader Bauer and Senate Democratic Leader Simpson come after the announcement of an April excise tax distribution error by the Office of the Auditor. This announcement comes after two other major mistakes of fiscal mismanagement by the administration that involve more than a half billion dollars. Following a motion made by Indiana Senate Democrats, the State Budget Committee unanimously agreed to begin the process of conducting an independent audit of the state’s fiscal practices.
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):
