Hidden Funds, Unaccounted Funds and Tax Increases—Oh My!

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Like Dorothy wandering through the forest in the Land of Oz, taxpayers in California are chanting a warning of disbelief this week: Hidden Funds, Unaccounted Funds and Tax Increases—Oh My!

Following the revelations about the parks department – the secret vacation payout slush fund costing the department $271,000 to the whopper of $54 million in hidden park special funds sitting untouched for a dozen years while the parks faced threats of closure – we learn that there is no accounting system in place for $37 billion in the state’s special funds.

Governor Brown, who is urging taxpayers to pass his nearly $50 billion tax increase (Proposition 30) blithely dismisses the hidden park fund scandal. The governor told reporters, “When somebody comes and says, ‘Hey, guess what, we have some money over here,’ well, that’s better than saying, ‘Whoops, we don’t have the money,’ ”

As the San Jose Mercury News scolded the governor in an editorial, “His dismissive attitude toward the scandal Wednesday was not encouraging.”

For taxpayers, it is more ominous. The same folks who say they need more of our tax dollars to run the government also say they don’t know how much tax money they currently have.

The governor and Department of Finance state they will follow up the parks funds scandal by auditing the state’s 500 or so special funds. The $37 billion in those funds are equivalent to more than one-third of the General Fund. The funds themselves are not secret. You can find them in what is called Schedule 10 in the budget. It’s all there from A to Y – the Abandoned Mine Redemption & Minerals Fund to the Yosemite Foundation Account.

However, apparently there is no auditing or accounting system for this money. As the Mercury News reported, finance officials “rely on an honor system to track money that could be stashed away in untold accounts.”

For taxpayers facing the constant drumbeat from politicians of the need for new taxes and having to decide on three statewide tax measures on November’s ballot, the management of current tax dollars has to be a major concern.

The park fund scandal follows the decision by Sacramento to fund the high-speed rail and to increase pay for legislative staffers in the midst of big state budget cuts.

The lions and tigers and bears of Sacramento money mismanagement are all around us and closing in.

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