State auditor’s office sitting on big budget surplus

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auditor

Regardless of what the legislature appropriates for the Texas State Auditor’s Office to operate for the next two years, the state’s chief watchdog agency is in no danger of running out of money.

The auditor’s office, which has run quietly for more than three years without an appointed chief, is sitting on nearly $58 million in unexpended funds, roughly 2.5 times the amount of its current $22.8 million annual budget, according to a Texas Monitor investigation. While the unspent sum is no more significant than a rounding error in the current $216.8 billion biennial budget, it is wildly out of whack with other agencies in its state classification.

And no one with any knowledge of that budget is willing to explain why. Despite contacts by phone and email, agency officials declined to answer questions about the $58 million. Staffers for the House Appropriations Committee, declined to respond to messages. Alexa Hoisager, a spokeswoman for the Senate Finance Committee, said committee members would have no comment while the two committees work to create a single budget in the final two weeks of the session.

Just getting the unexpended fund figure required a formal request for information from the state comptroller under the Texas Public Information Act. In the comptroller agency’s reply to the request, Greg Gilliland with the comptroller’s Open Records Division said the auditor’s office “is an Article X agency and therefore falls under different budget requirements than other state agencies.”

Article X is the last of the 10 classifications of all agencies in the biennial Texas budget. It includes include the House and the Senate and several small agencies that serve those bodies. Unlike other state agencies, which are expected to use up their allotted money or lose it, the Article X agencies are allowed to keep unspent funds at the end of a budget period and roll those amounts into the next budget. The comptroller’s office, the largest of those agencies, keeps track of the Article X agencies’ budget balances.

The state auditor and the others are essentially on their honor not to go on spending sprees. A review by The Texas Monitor of the last 10 general appropriations acts, which set the state government operating budget for the following two years, shows the legislature has routinely included riders allowing the auditor, the Texas Legislative Council, the Sunset Advisory Commission and others to roll over their unspent funds.

Just once, in the last budget cycle, did Gov. Greg Abbott veto such a rider. Abbott noted in his veto that the Legislative Budget Board’s budget had “skyrocketed by more than 700 percent” over the past 20 years to its current $11.7 million.

“This growth has corresponded with greater government authority being delegated to unelected bureaucrats rather than being undertaken by elected officials directly accountable to the voters,” Abbott wrote. “To begin the process of restoring the LBB to its intended limited purpose, I therefore object to and disapprove of this appropriation.”

Not so the state auditor’s office. The agency’s $50.6 million unexpended balance from the 2017 legislative session has grown by more than $7 million.

The House Appropriations Committee’s proposed budget for the agency, a reduction from $22.8 million to $15.8 million in the next biennium, might be a way of addressing the surplus. The Senate, however, is not asking for a similar budget reduction.

Last session, the legislature slashed the auditor’s two-year budget by almost 10 percent to its current $45.6 million. The agency has been without its highest paid employee since January 2016, when John Keel resigned after 12 years. Lisa Collier, his first assistant, has headed the agency since then.

Keel had been making almost $213,000 a year at the time he left office. Collier currently makes a little more than $181,000 a year.

Since the budget cut, as The Texas Monitor reported, the auditor’s office has maintained its recent annual production of about 50 audits a year.

The office got caught in a crossfire between Lt. Gov. Dan Patrick when he took office in January 2015 and former House Speaker Joe Straus. This session, with Straus no longer in the House, Patrick and current House Speaker Greg Bonnen, key members of the Legislative Audit Committee, have not explained why they have made no effort to name a new top auditor.

That budget surplus ought to prompt the legislature to take a careful look at the future of the agency and match it with a more realistic budget, Tony McDonald, legal counsel for the budget-hawking conservative advocacy group Empower Texans, said.

McDonald, a proponent of an aggressive auditor’s office, said there is no real excuse for an agency to carry an enormous unexpended balance. “That’s a lot of money to be sitting on, money that could be used somewhere else in the budget or put back in the general fund,” he said.

Talmadge Heflin, an acknowledged budget expert thinks the legislature needs to limit the amount of revenue Article X agencies can roll over. But Heflin, director of the Center for Fiscal Policy for the Texas Public Policy Foundation, said the rollover is a way for agencies to show how frugal they can be.

Heflin, who served 11 terms in the House, including time as chairman of the House Appropriations Committee, supports the legislature’s Article X authority because it allows for some state government flexibility.

“I can’t say in every case, but the reason for unexpended balance authority is that they may have work to perform that they can’t get to in the biennium it was appropriated for, but it still needs to be performed,” Heflin told The Texas Monitor. “Some agencies that do not have unexpended balance authority have a habit of spending down their appropriations before the end of the biennium so they have a basis for requesting the same or more for the next biennium. Not a good strategy for handling the taxpayers’ money, in my opinion.”

Mark Lisheron can be reached at [email protected].

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