Bullock admin, legislative auditor at impasse over $80M construction bonding

The Bullock administration and the legislative auditor remained at an impasse Monday over a disputed audit, which the administration says is delaying the sale of bonds for $80 million worth of state construction projects.

The auditor said Monday that ethics rules prevent him from discussing the audit until it’s finished – and he also wrote a letter to the Legislative Audit Committee, strongly criticizing the Bullock administration for discussing the issue publicly.

“We are forced the conclude this is an attempt to impair audit independence, with the bond issuance being used inappropriately to gain leverage in the situation,” wrote Angus Maciver.

The audit of the state health department has reportedly said the state faces a potential $130 million liability in its Medicaid program, because of flawed eligibility rules.

Bullock administration officials said the audit conclusions are incorrect – but that the Audit Division won’t back down, and therefore the liability must be stated to investors, thus driving up the cost of the bonds.

The administration said last week the delay could ultimately delay and increase the cost of the $80 million in projects funded by the bonds.

They also said Monday the Legislative Audit Division is “trying to have it both ways” by insisting on audit findings that are delaying the bond sales but refusing to allow public scrutiny of its work.

“It’s a bit rich to say `We’re going to hold you up, but you can’t check our work and we can’t talk about it,’” said Raph Graybill, chief lawyer for Gov. Steve Bullock.

Maciver told the Legislative Audit Committee Monday that audit findings can’t be discussed until the full audit is complete and the audited agency has a chance to respond. That isn’t scheduled to happen until April.

The chair of the Legislative Audit Committee, Republican state Sen. Dee Brown of Hungry Horse, said Monday she didn’t think the dispute was a big deal.

“The bonding is going to go forward,” she declared. “Nobody needs to jump off the roof or anything. I think that the buildings are going to be built, the highways are going to be tarred, the streets are going to be finished and Montana is going to be better for it. This is a little bump in the road.”

Brown was one of 10 senators who voted against the bill approving the construction bonds last year. The bill authorized the sale of $80 million in bonds to finance scores of water, sewer, bridge and building projects across the state.

The state had been preparing to sell the bonds to investors late last year. But the disputed audit has prompted the Bullock administration to hold off, saying the question of Medicaid liability has created uncertainty for the sale.

State Budget Director Tom Livers said the administration is looking into options for going ahead with the bond sale, despite the audit findings and their cost.

“Our question is, what’s it going to cost the public?” he said. “The money is going to come out of the projects somehow.”

Livers also wrote a letter to Maciver last Friday, urging him to expedite the completion of the full audit “as quickly as possible, saying that waiting until April is not acceptable.