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California finds $119 million more in untapped funds

The additional money that lawmakers were unaware of includes funds for healthcare programs, reimbursement of crime victims and cleanup of underground petroleum tanks.

August 04, 2012|By Chris Megerian and Paige St. John, Los Angeles Times
  • Gov. Jerry Brown, who had threatened to close 70 parks to help balance the budget, proposes using $20 million of newfound funds for park maintenance and for matching the private donations that ultimately kept the parks open.
Gov. Jerry Brown, who had threatened to close 70 parks to help balance the… (Rich Pedroncelli, Associated…)

SACRAMENTO — Gov. Jerry Brown's administration on Friday announced that $119 million more in untapped money was found in a sweeping audit of state accounts, bringing to more than $286.5 million the sum lawmakers were unaware of as they repeatedly cut government services.

The new discovery includes about $30 million for healthcare programs, almost $29 million for reimbursing crime victims and $12.5 million for cleaning up underground petroleum tanks. It follows revelations that nearly $113 million was languishing in a recycling program funded with consumers' bottle deposits and $54 million had gone unreported by state parks officials.

It's unclear how much of the money identified in the audit, launched last month in the wake of the parks scandal, could have been used to plug the state's deficit. Brown and lawmakers cut more than $1 billion from healthcare in the budget the governor signed five weeks ago.

On Friday, Brown, who had threatened to close 70 parks to help balance the budget, proposed using $20 million of the newfound funds for park maintenance and for matching the private donations that ultimately kept the parks open.

"Hopefully the state can work in partnership with the citizen donor groups to make sure we have a long-term plan for keeping parks open," said Gil Duran, a spokesman for Brown. "This is one-time money, and we're not out of the woods yet."

Ana Matosantos, the governor's finance director, said the audit showed that the situation at the parks department, which the state attorney general is investigating and state auditors are still examining, was unique.

"There are not other hidden asset-type circumstances," she said.

But the top-to-bottom review of more than 500 "special" funds, which are separate from the general fund and generally dedicated to specific purposes, showed the scope of a problem that raises questions about how firm a grip the Brown administration has on state finances.

The irregularities are a particular distraction for Brown as he pushes voters to pass billions of dollars in tax increases on the November ballot. Recent opinion polls have suggested many voters want some sign that California's fiscal house is being put in order before they will give more money to Sacramento.

The review released Friday included a study of two sets of June 2011 accounting data that the state does not routinely compare. One is from the controller's office, which manages California's cash flow, and the other is from the Department of Finance, which plans the budget.

Officials found 68 accounts in which bottom lines varied by at least $1 million. The administration attributed most of the imbalance to different accounting methods used in the two offices. But hundreds of millions were the result of errors including typos, omitted interest or miscalculated revenue.

The audit also turned up $422.7 million in discrepancies at the Public Utilities Commission, which regulates telecommunications and energy services, and officials said they have launched a more thorough review of its finances.

A spokeswoman for the commission, Terrie Prosper, said the accounting discrepancies are probably only "recording errors."

Administration officials said they would also take a closer look at the victim restitution fund. The board that oversees the account reduced reimbursements for medical care and funerals in February to save an estimated $17 million.

Auditors found that the program had almost $29 million more than was reported to budget writers.

Republicans have seized on the accounting weaknesses as evidence that the state can't manage its money and that voters should reject the governor's proposed tax increases.

Senate Republican Leader Bob Huff (R-Diamond Bar) criticized the administration's auditing efforts as "slapdash." He said a deeper study was needed "before we even consider going back and asking struggling families for yet another tax increase."

Assembly Budget Chairman Bob Blumenfield (D-Woodland Hills) defended the administration for acting quickly in the accounting scandal but conceded, "Clearly, we need a better system to track the money going in and out of our special funds."

Matosantos said many of the errors uncovered by the audit would not have changed how the state pieced together its budget this year.

"There are no other hidden pots of money that made the choices available to the Legislature different than what they were," she said.

But lawmakers have increasingly dipped into the funds to pay bills, and the Legislature now owes them $4.3 billion, a nearly sixfold increase since 2008.

chris.megerian@latimes.com

paige.stjohn@latimes.com

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