Brown Pledges to Fix Hidden Funds Debacle

Governor discloses new accounting rules meant to prevent future scandals

Gov. Jerry Brown and his team worked overtime on Friday to defuse a hidden money scandal that posed a genuine risk of voter backlash against his proposed tax initiative on the November ballot.

First, the governor's finance director, Ana Matosantos, unveiled an audit of more than 500 special state funds, declaring there were no more instances of "hidden assets."

That audit was prompted by the recent disclosure that parks officials had hidden $54 million in special funds for more than a decade. That scandal, coming at a time when private donors had stepped up to prevent park closures, cost State Parks Director Ruth Coleman her job.

Last week, the governor raised eyebrows when he sought to downplay the issue, saying it was better to have found extra money than no money at all. This week, the governor's tone changed, as he said it was "totally unacceptable" for parks employees to have stashed that cash.

Brown also called on the legislature to take $20 million of that hidden money and apply it immediately to pay for fixes to keep parks open.

Administration officials have no plans, however, to reimburse private donors for stepping in to keep parks from shutting down.

The governor's finance department did find, in its audit, nearly $200 million in errors that involved more than $8 billion dollars' worth of special funds. To prevent those kinds of issues going forward, the governor's office is putting new review procedures in place make sure finance's records and the state controller's records match.

Sure, this is all about accountability and good government. But the urgency is underscored by November politics.

Gov. Brown's appeal to voters to pass his $8 billion package of temporary taxes depends heavily on whether voters can be convinced that the state is getting its financial house in order. Even with these reforms, the governor's opponents will use the hidden funds issue as a powerful weapon.

The good news for Brown is that this unfolded in August. The election is a long three months way.

Author Kevin Riggs, an Emmy-winning former TV reporter in Sacramento, is Senior Vice President at Randle Communications.

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