There’s no excuse for hoarded cash

Capitol Journal

Turns out Gov. Jerry Brown had jars of loose change hidden all over town while poor-mouthing and asking Californians for a tax increase.

Not only pitching a tax hike, but also threatening to close state parks while whacking welfare moms and the frail low-income elderly, plus driving up student tuition.

The astute old pol — who sold wisdom and experience as his credentials for a third term as governor — says he didn’t know the jars existed. And that’s completely believable.

But it’s also irrelevant. It’s a governor’s job to know — at least his job to have appointed the eagle eyes who could have told him sooner than 19 months into his term.


Just as it was the job of the previous two governors — Arnold Schwarzenegger and Gray Davis — to have known, but apparently they never did. There’s some indication that the jars actually were accumulating unspent money back in Gov. Pete Wilson’s day.

You can just hear the voters: Typical, careless, irresponsible government. And they want more of our money.

Brown is pushing Proposition 30 on the November ballot, which would raise sales taxes slightly for everyone and income taxes sharply for the wealthy.

“When you ask people to increase taxes on themselves, the first thing out of their mouth is that they don’t trust the way government is spending the money it already has,” says Democratic strategist Darry Sragow, a veteran of several Los Angeles school bond campaigns.

“They say, ‘Hey, the money is in the system somewhere. We ought to make them find it.’

“The discovery of all these special pots where money gets squirreled away is by no means fatal to the governor’s tax measure, but it’s not helpful. Their existence confirms many voters’ suspicions.”

Let’s back up and review the basics.

Roughly two weeks ago, the Brown administration disclosed that the state parks system had stashed away nearly $54 million in two separate funds. The galling part was that the governor had been trying to save $22 million by closing as many as 70 state parks.


“This is undeniably disappointing news,” Natural Resources Secretary John Laird told reporters in an understatement.

Also politically embarrassing. And aggravating for the parks lovers who had been conducting bake sales and car washes — and dipping into their personal savings — in an effort to keep parks open. Many, understandably, want their money back.

Then on Tuesday, The Times reported that the state may even have had hundreds of millions of dollars more tucked away in other dedicated kitties, known in budget parlance as “special funds.” Again, the governor and Legislature apparently knew nothing about it.

Discrepancies were found in about two dozen funds when comparing balance sheets from the controller’s office and the governor’s finance department.


Special funds account for $39.4 billion, or 28%, of the state’s total $142.4 billion budget. The biggest budget chunk — $91.3 billion, or 64% — comes from the deficit-plagued general fund, which gets most of the attention.

The finance department has been doing a rush audit of the 560 special funds in an effort to uncover any other surprises.

Atty. Gen. Kamala D. Harris, at Brown’s request, is investigating the parks department for any possible skulduggery.

Beyond all this, the Brown administration, as of July 9, was holding $6.7 billion in various infrastructure bonds that had been sold but weren’t being spent, according to the treasurer’s office. That much borrowing would cost roughly $470 million annually.


To his credit, Brown has whittled down the idle amount from $9.6 billion a year ago. He actually inherited a $13.4 billion stash. But he had pledged to reduce the unused pile to $3 billion by now.

There are explanations for all this — the hidden parks money, the untapped special funds, the idle public works dollars. But they’re too complicated for anyone, so far, to explain convincingly. It just all sounds like a screw up.

The parks and other special fund discrepancies apparently involve, at least in part, cash versus accrual accounting methods. Example: When you buy a refrigerator, do you personally account for it when you sign the sales slip (accrual) or when you make the credit card payment (cash)?

The finance department and the controller’s office account for special funds differently. Big mistake. It shouldn’t be expecting too much for the state to keep a common set of books. It already does for the general fund.


There also very likely is a problem here of bureaucratic hoarding, especially when governors historically raid every pot of money they can find during a budget crunch. It’s a common practice: Hide it under a park cot for a rainy day.

Former Parks Director Ruth Coleman, who quickly resigned after a new auditor in her department unearthed the loose change, says she knew nothing about the hidden money. And virtually everyone seems to believe her. But they also agree with her that she should have known.

Then there’s the danger of a governor playing the Washington Monument game and it backfiring, as it did here. It’s the traditional D.C. threat: “You take away our parks money, we’ll have to close the Washington Monument.” Or 70 parks.

Brown called his bureaucrats’ bluff, figuring that if the parks closed, voters would see how badly the state needed more tax money. At least that’s my theory.


I don’t know precisely what happened or why. I only know that it shouldn’t have.

Now Brown should offer to return the parks lovers their bake sale money. He should have done it two weeks ago.