Comptroller: State Budget Audit Running Late Again

The annual report detailing exactly how much money Tennessee state government agencies have in the bank probably won’t be ready in time for Gov.-elect Bill Haslam’s first spending proposal, according to Comptroller Justin Wilson.

The new governor is charged with developing his 2011-12 budget less than two months after he takes office. But without the results of a yearly financial report, he and his staff will be making their spending projections based on less-than-certain 2010 budget numbers.

“I do not think (state budget writers) should rely on them being ready by the first of March,” Wilson told TNReport. “I’d certainly like to be able to do so, but I do not project that.”

The Comprehensive Annual Financial Report, otherwise known as the CAFR, is traditionally due on Dec. 31 for the budget year ending six months earlier. The document represents a head-to-toe review of state government finances.

Without the results of that report at the ready, lawmakers will have to make decisions based on fuzzy numbers that haven’t been audited, which can lead to problems tracking balances in state accounts.

This isn’t the first time the CAFR would be late. Officials put the full 2008-09 report to bed seven months behind schedule last year, forcing the legislature to approve the current year’s budget using unaudited numbers.

Lawmakers last year OK’d a budget without the CAFR — an exercise Sen. Andy Berke, D-Chattanooga, said he’d rather not repeat.

“Gov. Haslam is going to be faced with making a lot of important decisions very quickly,” said Berke, a high-ranking member of the Senate Democratic Caucus. “It’s trying to hit a moving target while you’re moving yourself. There’s no easy way to do it.”

Wilson wouldn’t cite any particular repercussions resulting from last year’s audits showing up tardy. “I cannot point to a higher interest rate on our bonds. To what extent it may have affected the federal government in giving grants, I don’t know,” Wilson said.

But the prospect of facing real-time fiscal unknowns and accounting ambiguities going into the new budget-crafting cycle is obviously less than ideal, he said.

Wilson’s office is also in charge of separately auditing the state’s use of federal funds. That review is due to the feds in March.

Wilson attributes the delays to problems in the government’s transition to the Edison accounting system, which kicked some sand into the state’s old-school bureaucratic bean-counting mechanisms.

“We believe that many of the problems have been resolved. You don’t know until you do it. You don’t know what’s in the box until you open it,” said Wilson.

The pressure will only increase on Haslam and his new administration going forward. The new governor will take office Jan. 15. He is currently assembling his administrative cabinet but has so far not begun piecing together a state budget that last year topped off at nearly $30 billion.

“Governor-elect Haslam and his team are following the state’s budget situation, and when they come into office they’ll be prepared to take on the state’s budget challenges with the best information available,” said transition team spokesman David Smith.

Wilson said he expects officials to finish the CAFR report “much earlier” than last year’s August completion. But the comptroller stopped short of saying when he expected the financial reviews would be done.

“We certainly will not meet our Dec. 31 goal,” he said.