A Fresh Start For Washington’s Watchdog

A Fresh Start For Washington's Watchdog
Among the duties of the State Auditor's Office (SAO) in Washington is conducting performance audits of specific programs run by state agencies. One which has been the focus of high-profile SAO performance audits is the Washington Department of Transportation (WSDOT). Seen here, a WSDOT employee inspects cracks in pontoons delivered for the new State Route 520 floating bridge. The defective pontoons were replaced prior to the new bridge being opened. Photo: WSDOT.

Whoever is elected, the troubled State Auditor’s Office (SAO) will get a fresh start in 2017. The two candidates to take over the embattled post argued this week at Suncadia over which one is most qualified to steer the office in the right direction. The debate was hosted by the Association of Washington Business.  As Republican Mark Miloscia and Democrat Pat McCarthy met, there was already plenty of water under the bridge.

Beset By Turmoil

SAO has been under a dark cloud leading up to and following the multiple count April 2015 federal indictment of current State Auditor Troy Kelley for alleged financial crimes at a business he operated before he took office. The charges included false declarations, attempted obstruction of a civil lawsuit, corrupt interference with Internal Revenue Service laws, filing false income tax returns, and making false statements to Internal Revenue Service agents. 

So far, Kelley has avoided conviction. Earlier this year a jury acquitted the Democrat and former Washington state legislator on one count, but was deadlocked on 15 other counts. Federal prosecutors plan to retry him once he leaves office next year.

Prior to Kelley, the SAO top post had been held for 20 years by highly-regarded Pierce County Democrat Brian Sonntag. Growing online access to the office’s work over that span, and Sonntag’s non-partisan emphasis on smart spending and strong ethics in government raised the profile of the office considerably.

So much so that voters in 2005 approved a ballot measure to expand SAO’s duties to include performance audits of state and regional government. Sonntag in 2012 considered a run for governor, but ultimately declined.

In the AWB debate, both Miloscia and McCarthy vowed to bring back public trust to SAO, though they disagree on the best way to do it.

McCarthy Accents Managerial Experience

McCarthy touts her current role as the Pierce County executive managing 3,000 county employees. She says she will “hit the ground running” once elected and properly oversee the 350 SAO employees working out of 14 regional offices in the state.

McCarthy is also a Sound Transit Board member and previously served as the Pierce County auditor.

“The most important thing we need to do is we need to hold government accountable,” she said.

Miloscia Says His Audit Instincts Run Deep

A state senator from the 30th District, Miloscia previously served as a state representative there. He currently chairs the Senate Accountability and Reform Committee. He first ran for state auditor, in 2012 as a Democrat but did not make it through the primary.

During the August 2 primary, Miloscia received almost 37 percent of the 1.3 million votes cast, while McCarthy garnered 29 percent. Democrat Jeff Sprung came in third with nearly 24 percent.

Miloscia repeatedly emphasized his background auditing Boeing programs for the Air Force during the 1980s as proof he has the expertise “to lead an audit agency that actually gets results.”

“You could hire me to audit your businesses right now,” he said.

The candidates do agree on a handful of issues. They’re both opposed to legislative proposals allowing local governments to have private firms perform state audits of local government finances, instead of SAO. They are also against further restrictions on public records requests as a way to reduce the $60 million that state and local governments spend annually fulfilling more than 285,000 requests.

One of of SAO’s duties is running the state whistleblower program. SAO also performs two types of government agency audits. The first is financial audits of accounting practices. The other is performance audits which seek to maximize effective use of taxpayer dollars by identifying potential savings or inefficiencies in government programs.

The performance audit program was created through voter approval of Initiative 900 in 2005. It dedicates 0.16 percent of state sales tax revenues from the general fund to performance audits.

Several years after the program was set up, then-State Auditor Sonntag discovered $110 million in potential savings based on audits of the Washington State Department of Transportation (WSDOT). He offered the agency recommendations on how to reduce traffic congestion, which he estimated would provide $3 billion in eco­nomic benefits.

Accountability And Economic Growth

In 2016, SAO, completed performance audits on WSDOT toll collection and found the agency was not properly enforcing contractor compliance regarding information security standards. In July 2015, an SAO audit found ways for regulatory agencies to better coordinate their requirements and permitting activities as a way to “promote economic vitality and improve program efficiency.” That same year, another audit found overlap within the state workforce development system.

Disagreement On Performance Audit Emphasis

Despite the value of performance audits, the candidates differ as to their importance. McCarthy accused Miloscia of being “singularly focused” on them, when there are other options available to make government more efficient.  In contrast, Miloscia sees them as a “silver bullet” that can hold government agencies accountable while also providing feedback on how to improve internal processes.

“I will be scoring every agency out there,” he said. “You find out who is doing it right or wrong.”

However, both candidates vowed to fight to preserve funding for performance audits, which have been under attack in recent years.

During the legislative session this year, Governor Jay Inslee and state lawmakers sought to drain $10 million from the performance audit fund to cover other spending in the 2015-17 supplemental budget. However, half of that money was ultimately saved. Among the audits the money will fund is a probe of how well Washington state agencies work with small businesses on regulatory impacts.

McCarthy plans to utilize strong relationships with lawmakers across the state to protect performance audit funding, while Miloscia cited the nonpartisan approach taken by Sonntag as inspiration.

“It was not about ideology with Brian,” he said. “That’s what I intend to do (when in office).”

 

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