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A flush slush fund

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Sunday, May 6, 2012, 12:30 a.m.

HARRISBURG -- There was a huge disconnect when members of the Legislative Audit Advisory Commission, six months late, considered the audit of 2010-11 legislative spending.

It was as if the Senate and House members were oblivious to the public. There was no agenda for the public to review in advance, much less at last week's meeting. Only upon request were a few passed out. Same thing later with the audit.

The purpose of this panel is to protect the Legislature's slush fund, now at $183.6 million.

That's enough to plug some of the budget cuts some groups are protesting daily at the Capitol. It's a slush fund, rather than a surplus, which they like to call it, because during the 2005 pay-raise fiasco, lawmakers were authorized to collect the raise early, in contravention of the state Constitution. This account was the source of the money.

Legislative leaders agreed previously to return $62.7 million to the treasury, which hasn't happened yet. When it does, the surplus will be "down" to $121 million, still enough to operate a small state agency.

Supposedly, the slush fund is for a budget crisis so the governor can't hold the upper hand by vetoing legislative operating money.

The meeting began with the commission calling an executive session to meet secretly. The stated purpose was a "personal matter," said Sen. Vincent Hughes, D-Philadelphia. There is no such exception for closed-door meetings under the Sunshine Law. Rep. Gordon Denlinger, R-Lancaster, the chairman, later said it was about getting quorums at meetings. An earlier scheduled meeting had been postponed.

"What really required the secrecy of an 'executive session'? Or was it simply illegal?" wrote Tim Potts, co-founder of Democracy Rising PA.

During the meeting, Stephen Baloga, an Ernst & Young partner, said some mind-blowing things. His firm conducted the audit.

"We have concluded we are in fact independent of the General Assembly," Baloga said.

Really? The firm was paid $230,000 in taxpayers' money. Sure, it is a big-name firm with credibility. But how can anyone be truly independent of his employer?

This is the Legislature's audit of itself, said Eric Epstein of Rock the Capital.

"Where is the RFP (request for proposal)?" Epstein kept saying from the audience. He wanted to know why the Ernst & Young contract was not competitively bid. No evidence was produced confirming that.

Baloga also said the audit "should not be used by people not familiar with the General Assembly's procedures."

Really? Why not? We paid for it.

Baloga went on to tell the committee that auditors found some instances of legislators being reimbursed with tax money for alcoholic beverages with meals. "We're talking about a drink here or there, a glass of wine, not a large amount of alcohol," Baloga said.

Their names were not revealed and it wasn't in the audit.

Denlinger said the lawmakers involved were required to reimburse the state. But he could not cite any House policy prohibiting alcohol purchases with state money.

Steve Miskin, a House Republican spokesman, said later a policy would be formulated and approved as part of new rules.

That won't happen until 2013.

In the next audit, the commission might get a 12 percent discount by using a little-known affiliate of Ernst & Young, Baloga said.

If so, where's the 12 percent discount for being overcharged this year?, Epstein said.

Lawmakers did not like the reformers shouting out questions from the audience. But they had no choice.

The commission was steamrolling the public's concerns.

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