For years, quasi-government agencies have operated under grey areas in oversight and accountability. After a number of reports of embezzlement, financial malpractice, and misuse of funds, state governments have started to keep a close watch on them.
In Utah, a 2014 audit into the Utah Transit Authority revealed major discrepancies within the agency. The UTA doubled spending on bonuses while also seeing a sales-tax hike. According to the Salt Lake Tribune, bonuses totaled $870,000 to $1.74 million per year since 2012, and the agency allowed a $10 million prepayment to a developer before completion of a project that never took place.
Issues within the UTA were only uncovered after Senator John Valentine (R-Orem) asked for an audit of the agency’s finances, which in turn only happened after rumours of shady deals happening at the agency were too widespread to ignore.
Utah law includes quasi-public corporations as independent entities in the state. They have the power to create their own budget and fiscal requirements and operate as they please. Nonetheless quasi-government agencies do have some type of reporting mechanism they are required to fulfill, according to the law.
“The authority shall comply with the audit requirements of Title 51, Chapter 2a, Accounting Reports from Political Subdivisions, Interlocal Organizations, and Other Local Entities Act” (Utah Code §63H-1-704). “The authority shall, within 180 days after the end of the authority’s fiscal year, file a copy of the audit report with the county auditor, the State Tax Commission, the State Board of Education, and each taxing entity that levies a tax on property from which the authority collects tax increment” (Utah Code §63H-1-705).
Still, the state has managed to detach itself from quasi-government entities. State law also notes that it is not liable for independent corporation finances, but quasi agencies, like UTA, use taxpayer funds.
In Connecticut, state officials are hoping to get ahead of disastrous situations like those of the UTA. In doing so, the state launched OpenConnecticut, an online portal that opens the state’s books and allows all Connecticut residents to access and monitor the state’s financial data, including checkbook-level payment information updated annually.
“Since I’ve been Comptroller, we have slowly but surely been exposing state and fiscal budget information to Open Connecticut . Payrolls, pensions, and quasis are one piece of this,” said Connecticut State Comptroller, Kevin Lembo.
Open Connecticut includes quasi-public agencies after Lembo sent out a call to them to voluntarily provide checkbook-level data annually.
“They inhabit a rare space, and in doing so, take all the advantage but not often all the constraints. I felt it was important to include them in our transparency efforts and focus on how they work,” added Lembo.
However, three agencies have either declined or have not even responded to Lembo’s most recent and repeated follow-up requests. Late last year, Lembo sent a letter to the state’s former Governor Dannel Malloy to further help in the matter. Although the data has not yet been released, the Comptroller’s office says there has been a commitment from these agencies to disclose information.
“These last few agencies have made a commitment, but we’re still waiting for them to get us the data,” said spokeswoman for the Connecticut Comptroller’s Office, Tara Downes.
Even if the three remaining quasi entities do not comply, there are no clear consequences for these agencies. The state’s language on quasi-public agencies allows for their own governance and independent business.
“Any consequences would be embarrassment and they would have to have a very good reason,” added Lembo. “We have a new Governor in Connecticut thats dependent of oversight and I would lean on him to reverse any decisions on quasi corporations. We are considering legislation to eliminate the option.”
Do know a quasi-public corporation in your state that’s lacking oversight? Let us know!