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Warner Use Of Funds Criticized

Transfers Aided Governor's Office

By Michael D. Shear
Washington Post Staff Writer
Sunday, October 17, 2004; Page C01

RICHMOND -- Virginia Gov. Mark R. Warner (D) has continued a practice of inflating the budget for his office by transferring more than $1 million from other executive agencies, and did so without reporting the accounting moves to legislators as required by law, senior Republican lawmakers have charged.

Legislative sources said the General Assembly's auditor of public accounts is scheduled to testify before lawmakers on Monday that Warner, who had pledged in 2002 to reduce his office budget by 15 percent, increased spending on his immediate staff slightly in 2003, from $3.69 million to $3.74 million. The transfers, which began under previous governors, continued in 2004, while overall spending fell by 8 percent, the report by Auditor Walter Kucharski shows.


Gov. Mark R. Warner, left, continued a long-held practice, drawing criticism from Appropriations Chairman Vincent F. Callahan Jr.

In a memo dated Oct. 6 to House Speaker William J. Howell (R-Stafford) and Appropriations Chairman Vincent F. Callahan Jr. (R-Fairfax), the staff director of Callahan's committee says the size of the financial transfers into Warner's 29-person office should have triggered legislative notification.

"Over the last several years, the governor's office has relied on excessive transfers in order to meet its budget," wrote staff director Robert P. Vaughn. "The governor must notify the chairmen of House Appropriations and Senate Finance committees. No such notification has occurred."

House Majority Leader H. Morgan Griffith (R-Salem) said the governor's actions stand in contrast to his reputation for being a fiscally sound manager of Virginia's budget.

"He's used accounting gimmicks to, on the one hand, say he's cutting and then transfer money from other divisions into spending in the governor's office," Griffith said. "He's not the first governor to play games, but at some point, we have to draw the line."

Warner's chief of staff, William H. Leighty, acknowledged the transfer of most of the money from the office of the secretary of the commonwealth to the governor's office. He defended it as a transparent yet "regrettable" practice that started years ago and continued through the administrations of former Republican governors George Allen and James S. Gilmore III.

Leighty said the amount formally budgeted to run the governor's office -- about $2.4 million for the past several years -- is unrealistic. He said Gilmore's staff included nine people who were paid by other state agencies at a cost of about $678,000. Warner's staff includes two such positions at a cost of $125,000.

But no governor has wanted to seek a formal increase, he said. And Warner chose to follow suit because of how such a request to lawmakers might look during the state's budget crises of the past several years, he said.

"When we assumed office, we were faced with the unfortunate reality that the budget for the governor's office did not reflect what was actually spent," Leighty said. "It's not like we thought we were hiding anything."

The budget for the small office, which includes salaries for lawyers and policy staff and the governor's public relations team, became an issue in October 2002, when Warner announced that most agencies would have to take a midyear cut in their budgets of 7 percent to 15 percent to stem the red ink of a $3.8 billion shortfall.

He pledged to cut his own office by the largest amount, 15 percent, and to take a personal cut in his salary of 20 percent. Officially, the governor makes about $124,000 a year. Warner, a millionaire, takes 80 percent of that.

Leighty said the governor's office did in fact make the 15 percent cut in the fall of 2002. It shaved personnel costs by about $350,000 a year by eliminating five positions and trimming salaries for Leighty and Warner. It also saved about $30,000 a year on office administration.

"I am 100 percent confident that we did everything we promised we would cut," Leighty said.

But he said the budget for the office began growing again, largely because of salary increases approved for state workers by the General Assembly and because of the rising cost of health insurance and retirement contributions that are part of the budget.

Of the $3.44 million spent in 2004, 82 percent was used for salaries and benefits, the auditor's report shows.

Callahan, a 36-year veteran of the General Assembly, said he is most concerned about Warner's apparent decision to transfer the money each year without alerting senior lawmakers. He said governors need to abide by the laws . "I'm a child of the legislature," he said. "I guard our prerogatives very carefully."

Leighty said he believes the legislature did not need to be notified of the transfers because the secretary of the commonwealth is not, technically, a separate agency. He said it has always been considered part of the governor's office even though the auditor budgets it separately.

He said he has pledged to Kucharski that the budget Warner submits in December will end the practice of transferring money. Virginia's financial crisis has waned; the state is now anticipating a surplus of several hundred million dollars thanks in large part to a rapidly improving economy in Northern Virginia.

Republican lawmakers said Warner's decision to end the transfers is actually the result of their decision during budget negotiations this year to close the loophole that allows governors to continue the practice.


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