State bureaucrats have been borrowing out of the state's general fund to the tune of $42 million to buy new cars, trucks, computers and telecommunications equipment.
But they didn't do anything that state legislators didn't give them the power to do. And now legislative leaders are looking to rein in the spending.Tuesday afternoon, an often-confusing discussion of "inter-agency" fund accounts alternatively left legislative leaders angry and perplexed over such "borrowing."
In some cases, it appears just to be a shell game. Take so many numbers from one state account and put them in another. Little harm done.
But as members of the Executive Appropriations Committee learned, when it comes down to the $150 million invested in state vehicles, the fleet department's borrowing out of the fund becomes real money that could lead to less money for college programs and road work.
"We can't ignore this monster," warned Sen. George Mantes, D-Tooele. A car dealer, Mantes said the state has historically ignored the real cost of replacing its aging vehicle fleets.
While the main fleet management agency has "borrowed" $42 million from the general fund in fiscal 1998, "that will be chump-change" in the years ahead if the financial accounting isn't reformed and vehicle purchases put on a firm financial footing, warned Mantes.
The Deseret News reported four years ago that the Legislature could have spent around $238 million in one-time monies, made available because of a new accounting system adopted by the state. Twenty-one states went to the new accounting system back then, with all but Utah spending some or all of their funds, called "accrued taxes."
Basically, accrued taxes are one month's worth of state tax receipts that, because of the change in accounting procedures, went on the books at the end of fiscal 1994.
But legislators didn't even discuss the extra spending in the 1995 Legislature because state finance officers didn't tell them about accrued taxes.
The real, tangible existence of the accrued taxes popped up again Tuesday.
Apparently, while most legislators didn't know about the available funds back then, financial bureaucrats did.
And they used the accrued taxes to zero out the interagency fund balances owed by any number of state agencies.
Raylene Ireland, director of the state's Administrative Services, said from the time her department was formed in 1981 some state agencies have fallen behind in paying for telephone, computer, vehicle and other internal state services.
Accrued taxes were used to zero out the accounts, said one state finance official. Asked if those were the funds that could have been spent by legislators in 1995 after the accounting change, he replied yes. "We didn't include those in the budget that year," he said. Perhaps $20 million of the funds were used to zero out the interagency accounts.
It seems odd that the money couldn't be "spent" three years ago, as some legislators claimed after the Deseret News reported on the funds, but was quietly used to zero out internal borrowing accounts.
Various agencies have since used legislative authority to "borrow" out of the general fund since 1994. In 1995, $14 million was borrowed out of the fund to pay for cars and other items. In 1996, $30 million was borrowed.
In 1997, $36 million was borrowed. And last fiscal year, which ended June 30, $42 million was borrowed.
Some may argue that the money can just be forgiven. It's kind of like borrowing money from your family savings account and then deciding that you won't pay it back. No problem.
But a special vehicle-management consultant, who conducted a study of how the state fleet is financed, told legislators Tuesday that if they don't get the "borrowing" by the fleet department under control, it will cost the state tens of millions of dollars very soon to replace worn-out cars, trucks, vans and dump trucks.
The consultant, Paul Lauria of the firm DMG Maximus, said the state's vehicle fleet is older than it should be and not enough money is being charged various state agencies to replace the old cars with new ones.
And here's the kicker. While some may say the borrowing is only internal number debates, if the state adopts a true pay-as-you-go system of vehicle financing, state departments will be charged a lot more for their cars and trucks by Administrative Services.
Utah's colleges and universities will have to pay twice as much each year for every vehicle they run - $5,251 a year as opposed to the current $2,534. The Utah Department of Transportation will have to pay nearly three times as much, from $8,106 instead of $2,600. (The difference comes in part because UDOT buys dump trucks that cost $85,000 apiece compared to sedans and vans bought by institutions of higher education).
Those are real dollars and if college-owned vehicle costs double and UDOT vehicle costs triple, there's less money to educate students and less money for roads.
College students could face higher tuitions, drivers could face higher gasoline taxes. Or, programs and projects could be trimmed.
GOP legislative leaders asked Ireland to come back next month with a historical explanation of interagency accounts and why the accounts were zeroed out in 1994.
House budget chairman Rep. Marty Stephens, R-Farr West, promised after the meeting that legislators would get a handle on interagency accounts and borrowing from the state's general fund.