Tuesday, October 19, 2004

RICHMOND — For at least five years, governors have transferred millions of dollars from state agencies to bolster staffing in their offices beyond what the General Assembly had approved, the state’s top auditor told the House’s budget-writing committee Monday.

The Republican-run Appropriations Committee zeroed in on the incumbent, Gov. Mark Warner, sometimes to melodramatic effect, for $1.1 million transferred during the last budget year from the secretary of the commonwealth’s office.

Delegate Leo C. Wardrup Jr. said the transfer amounted to “a categorical violation of the law” by Mr. Warner’s administration and “accounting legerdemain” that eclipses the Enron scandal.

“The effect of these transfers was actually to reduce the amount of general fund available, am I right?” asked Mr. Wardrup, Virginia Beach Republican.

It was, said Paul Van Lenten Jr., an Appropriations Committee staff analyst.

It was one of the first partisan skirmishes leading into next year’s legislative session and the races for governor and other statewide offices next fall.

Auditor of Public Accounts Walter J. Kucharski was more reserved, but nevertheless troubled by the transfers.

“There’s some questionable judgment,” Mr. Kucharski told the panel. “I have a problem with it and have had a problem with it.”

A change in the budget law prevents Mr. Warner from using the same maneuver this year, and he will have to seek supplemental funding for his office from lawmakers this year or lay off staff.

Transferring cash into the governor’s office to pay salaries and other operating expenses is not new. Governors of both parties have done it for years.

They also have paid senior administration officials and top advisers directly from agency budgets, even though the staffers work daily in the governor’s suite of Capitol offices and their true duties bear little semblance to the missions of agencies that actually paid them.

In Mr. Kucharski’s analysis, he showed supplemental transfers boosted every governor’s budget by hundreds of thousands of dollars since the fiscal year that ended June 30, 2000.

The largest year-over-year jump in supplemental transfers came in fiscal year 2002, which spanned the final six months of the administration of Gov. James S. Gilmore III, a Republican, and the first six months of the administration of Mr. Warner, a Democrat. As a recession took hold and the state found itself in a nearly $4 billion shortfall, the amount the governor’s office transferred that year was $1.34 million, nearly double the supplement Mr. Gilmore commandeered for his office the previous year.

Some of the added expense resulted from severance packages for Gilmore staff who departed when Mr. Warner took office in January 2002.

In fiscal 2004, Mr. Warner spent $3.4 million on his office instead of the nearly $2 million the legislature budgeted for his office.

The budget required the governor to report so large a shift to the Appropriations and Senate Finance Committee chairmen, and that wasn’t done, said Delegate Vincent F. Callahan Jr., Fairfax County Republican and Appropriations Committee chairman.

Notification wasn’t required, Finance Secretary John M. Bennett argued, because most of the money came from the secretary of the commonwealth’s office, which acts as an arm of the governor’s office.

It manages thousands of gubernatorial appointments to boards and commissions, making it the most political of the Cabinet secretariats.

“I’ll admit that it’s arguable, and we’re relying on what has been traditional practice,” Mr. Bennett said.

Mr. Warner has four persons on his staff who are on the payrolls of other agencies, with salaries and benefits totaling about $180,000, according to figures from his office. Nine members of Mr. Gilmore’s staff were paid nearly $680,000 off state agency payrolls as of June 30, 2001, records show.

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