As the governor and lawmakers make ever-deeper cuts, accounting discrepancies mean that large sums, such as $113 million in a recycling program, may be untapped.
By Chris Megerian and Paige St. John, Los Angeles Times
July 31, 2012
SACRAMENTO — California may have had hundreds of millions of dollars more on hand than the governor and lawmakers knew about as they struggled to close the budget deficit this year, a Times analysis shows.
Officials are scrambling to explain discrepancies in about two dozen state funds identified in a comparison of balance sheets from the controller’s office and the administration of Gov. Jerry Brown.
One case involved $113 million sitting unnoticed in a bottle recycling program. The money could have helped stave off cuts in welfare, healthcare or parks, but lawmakers were told the program was broke and dipped into other funds to keep it afloat.
In some instances, state officials said, there was an appearance of extra cash due to differences in bookkeeping methods between the Brown administration, which plans the budget, and the controller’s office, which manages California’s cash, essentially functioning as its banker.
The accounting irregularities highlight the tenuous grasp California’s government has on its finances even after years of lingering budget crises. Officials have reshuffled policy priorities in their efforts to balance the budget, cutting deeply into state services, and Brown is pushing voters for tax hikes, saying that otherwise the government can’t pay its bills and public schools will suffer.
“When a state’s revenues have been hammered as hard as California’s have during the last few years, the reasonable expectation would be that state officials are finding every last dollar before going after services with a meat cleaver,” said Nicholas Johnson, vice president for state and fiscal policy for the Center on Budget and Policy Priorities, a Washington think tank.
Administration officials concede they don’t routinely compare the two sets of ledgers for the more than 500 “special” funds. They said they would soon release their own review of the accounts, which are separate from the state’s general fund and are often created to pay for specific programs. The money comes from user fees and from some taxes and is managed directly by state agencies.
The audit was triggered by the recent discovery that the parks department had $54 million in unreported funds even as it threatened to close 70 facilities and was soliciting private donations to keep many of them open. Brown has called for an investigation.
Mike Genest, who was former Gov. Arnold Schwarzenegger’s finance director, said the intricacies of California’s finances make it difficult to pinpoint every dollar.
“It is more complicated than anybody’s personal checkbook,” he said.
Spending from special funds is expected to hit $39.4 billion in the current fiscal year, almost 28% of the state’s total $142.4 billion budget. The accounts are critical to California’s finances: Lawmakers routinely borrow from them to help pay the bills.
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