It’s Only Money

As P.J. O’Rourke famously observed, “The Democrats are the party that says government will make you smarter, taller, richer, and remove the crabgrass on your lawn. The Republicans are the party that says government doesn’t work and then they get elected and prove it.”

P.J., you were prescient!

The headline in the Star tells the story: “For the second time in only four months, the state is admitting it made a massive revenue error.”

“This one cost counties $206 million in revenue that they have been owed from January 2011 to now and which will be repaid with interest as of April 5. The first, announced last December, resulted in a $320 million windfall to the state’s general fund.”

After the news of this latest “programming error” broke, a couple of heads rolled–appropriately, in my view. But the folks taking the fall are hardly the only incompetents in this situation.

As a disgusted (Republican) businessman friend of mine emailed me earlier today,

“So much for fiscal discipline and competent management.  If you recall, late last year the State “found” $320 million just sitting in a bank account, having not been “swept” into the general fund as all other tax revenues have/had; now they “find” – oops – that they failed to pay local units of government hundreds of millions of dollars they were owed.
Riddle me this: How can policy makers and legislators pass good/sound budgets when the governor/administration provides such wildly incorrect information on the state of the budget?  As just one example, Mitch pushed for the “automatic taxpayer refund” because our fiscal house is in such great shape – the State even calculated that taxpayers will get a whopping $70/person (whoopeee)… Will the state still pay that out and further starve govt and localities of needed revenue for essential services like crime control? And how do we know that calculation was even close to correct?”
The scorn heaped on the “lets run government like a business” Daniels Administration is well deserved; no real business would survive fiscal mismanagement on this scale.  But local governments aren’t exactly being run by  the sharpest knives in the drawer, either.  Didn’t the Ballard Administration notice the city had been shorted $41 million dollars? It’s not like Indianapolis was so awash in money that a missing $41 million simply escaped the notice of those charged with managing the City budget.
When the Daniels Administration “found” 320 million dollars it had overlooked a couple of months ago, the Governor brushed away calls for an independent audit. This latest “whoops!” suggests such an audit is considerably overdue.
State Senator Vi Simpson summed up this whole sorry mess in an email sent out today:

Today, we found out that Republican Gov. Mitch Daniels has mishandled more than half a billion dollars of our money.

While he was out of the country, the Governor’s Office said the state has deprived counties of $206 million in revenue between January 2011 and now. That money will be repaid with interest, and several top officials are resigning in the wake of the scandal.

Last year, Daniels jokingly told reporters that “finding” more than $300 million in missing revenue was like getting an early Christmas gift.

It was no joking matter then, and now that the problem has grown $200 million more serious, it’s starting to feel like Hoosier taxpayers have been the victims of a cruel April Fool’s prank.

I was one of several Democrats who publicly called for an outside audit after the first round of missing money was discovered. At the time, Daniels dismissed it as a partisan plea.

He was wrong then, and now we know his frequent cries for “fiscal responsibility” have never applied to his own administration.

The worst part of this story isn’t the horrendous mismanagement of hundreds of millions of taxpayer dollars – it’s the fact that local governments have had to lay off police officers and firefighters and reduce services to make ends meet because Daniels was hording their money.

It’s hard to argue with that assessment.


  1. State Government has also cut $300 Million for each of two years from local schools to ‘balance the budget’ when the state budget was apparently more than balanced with these ‘found’ funds.

    Schools have laid off teachers, cut courses, enlarged classes, reduced teaching time to require more expensive state testing, and reduced remediation for kids needing extra help. Then the state designs a new system to grade schools poorly to justify state takeovers of schools due to the problems the state created.

    It’s another example of the catch 22 which state government is determined to win at the expense of local governments and the services taxpayers expect and want them to provide.

  2. I bet if they looked real hard, they might find a cashbox with canal tolls left over from the 1840s…

  3. This points to one of the central problems with government financing: no one will ever be as good a steward with somebody else’s money as they are their own.

    Today’s sign that even in right-leaning Indiana, there are way too many irons in the fire.

    I don’t buy the allusion that it was intentionally done, I think it has much more to do with incompetence/indifference. Case in point: the $30 odd million or so we spent on the STARS BMV system 10 years ago that we let sit on a shelf for 5 years. I would expect more of this to come.

  4. If they send me $70, I’m donating it to the Indiana
    Youth Group

  5. i actually see this as something the right in the state will rally behind rather than a point of shame. i think they will point to this and say “see, look how the counties can function with less revenue. we really can run government more efficiently. let’s cut taxes.”

    i think that too often, all people can view things through a lens that supports their original views even when the data suggests a challenge to them. i heard something in the military that kind of stuck with me, it’s i suppose only vaguely correlated to this but i’ll digress. the argument went that humans are naturally pragmatic, that we tend to look back on the past and only remember the good times. in looking back at my time in iraq (2003-2004; 2005-2006) i find that this is pretty true. that time was miserable for me(a young infantryman). we did things i never thought i could do, and suffered through some pretty lean times. yet, at the same time when i think back to it it was in a way the best time of my life.

    i believe this is because we tend to be positive. and view things in a way that supports our original views. call it biased reality? idk. like i said, digression.

  6. Hard to disagree with Senator Simpson’s point on public safety and others affected. I’d take Governor Daniels overall fiscal frugality in a heartbeat versus President Obama’s continuation of dysfunctional economic “leadership”. But, like offshore drilling inspections that didn’t get done, lack of Fannie Mae oversight, or our library rennovation that cost millions extra- if we don’t sufficiently inspect, we’re not protecting the public’s tax dollars or the end recipients.

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