Controller defends method of paying state’s bills

Tuesday, March 9, 1999 | 10:47 a.m.

CARS0N CITY -- The state is having a cash-flow problem but state Controller Kathy Augustine -- rejecting a contention by Assemblyman David Goldwater -- says she hasn't done anything illegal in order to pay the bills.

Augustine said Monday tax collections are coming in slower than predicted and that the bank balances are low.

She denied allegations by Goldwater, D-Las Vegas, that she has dipped into the state's so-called "rainy-day" fund without permission to pay bills.

Goldwater said there may be a violation of law and he would ask the Legislative Counsel Bureau and the attorney general's office to look into it.

The law says the rainy-day funds can only be used if the governor declares a state of emergency and the Legislature concurs.

Goldwater was referring mainly to a transaction made Jan. 27. The state had a book balance of $126 million. But Augustine sent $142 million to the state's school districts as their quarterly allotment, knowing, she said, that the bank balance is always greater than the book balance.

Goldwater alleged the difference came out of the rainy-day fund.

But Augustine said agencies may put the money in the bank but not record the amount until later. There was an estimated $30 million more in the bank than had yet been recorded by the agencies, West said, adding that's why there was enough to cover the $142 million.

"As anticipated agency receipts were deposited and recorded, the book balance returned to positive," Augustine said. "At no time was there an actual negative balance in the bank account."

Goldwater said testimony by Deputy Controller Ken West before the Assembly Ways and Means Committee Monday indicated money from the rainy-day fund, which totals more than $120 million, was used to pay bills but was then reimbursed immediately.

"This is comparable to borrowing money out of the petty cash fund at work and planning to pay it back later before anyone noticed it was gone," Goldwater said.

"What if there were to be an emergency that would prevent the repayment? That is a question Mr. West could not adequately answer."

West said later Goldwater misunderstood his testimony. He denied saying he ever used the rainy-day money. But he admitted saying it would have been nice if that money had been available.

Augustine, a Republican, suggested Goldwater's statements were "politically motivated." She strongly denied the fund was used when the state ran short of money.

To help with cash flow, Augustine has asked state Budget Director Perry Comeaux to make sure the state is collecting on its billings promptly.

And to keep money in the bank, Augustine has delayed transferring $10 million to the legislative fund to pay for the cost of the session. She said that money will be sent to the Legislature in periodic payments, rather than one lump sum.

The state may again run into a major cash flow problem at the end of April, when another quarterly apportionment is due the schools. Augustine has the authority to dole out the school aid monthly if a quarterly payment would cause the book cash balance to become negative. But she said that would cost the school districts $600,000 in interest they normally gain from having a lump sum to invest.

"That would be the last resort," Augustine said.

She said she told the governor and the treasurer's office of the problem last month.