By Michael D. Shear
Washington Post Staff Writer
Friday, August 25, 2006; B09

RICHMOND, Aug. 24 -- The top finance official for former Gov. Mark R. Warner knew about accounting errors that left the state budget out of whack by $137 million but failed to alert his successors, according to a legislative report that is to be released Monday.

Republican leaders in the House of Delegates said that the actions of then-Finance Secretary John Bennett were "outrageous" and that they plan to hold a special hearing of the Appropriations Committee on Monday so that current tax and budget officials can explain how an error of that size could remain hidden for so long.

"I am outraged. It's unfathomable why it happened this way," said Vincent F. Callahan Jr. (R-Fairfax), chairman of the House Appropriations Committee. "At the very minimum, he can tell somebody. He can tell Governor [Timothy M.] Kaine. He can tell [Kaine Chief of Staff] Bill Leighty. He could tell me."

The inquiry was performed by the Joint Legislative Audit and Review Committee at Callahan's request after Fairfax County school officials noted discrepancies in state education funding.

The report blames "inadequate quality control" for the errors, which included a simple math reversal -- addition when there should have been subtraction -- and a mix-up in how the state calculates revenue from the sales tax.

"The lack of follow-up to seek an immediate resolution of these concerns, to inform the incoming governor and legislative budget committees . . . proved inappropriate considering the ultimate magnitude of the errors," the report concludes.

Lawmakers and Kaine officials said the errors, discovered six months after Bennett and Warner (D) left office, will not affect school budgets.

"We spend $3 billion a year on public education in Virginia," Kaine spokesman Kevin Hall said. "This is a $137 million hiccup that will not have a negative impact on any district or any child."

Hall also said that House Republicans were using the errors to "stir up partisan mischief" by heaping criticism on two Democratic administrations. He noted that the governor's office has prepared legislation to fix the problem and is urging lawmakers to pass it as soon as possible.

Hall added that Kaine was not happy to learn that members of his predecessor's team and some employees in the tax and budget departments knew about the error.

"Absolutely, this information should have been sent up the chain, and Governor Kaine has clearly indicated his disappointment that that did not occur," said Hall, adding that no disciplinary action had been taken.

Bennett, now a senior finance administrator for Virginia Commonwealth University, said he takes "full responsibility" for the errors made while he was Warner's finance chief. He said he thought that the errors would be found and corrected by staff members of the departments of tax and budget but that he should not have assumed that would happen.

"The mistake I made was not being certain that [Secretary of Finance] Jody Wagner and the governor's staff were fully briefed," Bennett said.

He added that "it's very easy to find one error in the budget. There are thousands and thousands of calculations. It has nothing to do with the management of the finances. It was a human error."

The errors were in the proposed budget that Warner introduced in December before leaving office the next month. The errors remained in the budget that lawmakers passed and Kaine signed at the end of June. Fairfax school officials noticed the bookkeeping flaw days later.

"We were shocked, I guess, that something of this magnitude would go deliberately uncovered," said House Speaker William J. Howell (R-Stafford). "Are there other instances out there lurking that we don't know about?"

Howell said Bennett should have communicated with lawmakers in December and told them about the errors. Had he done that, Howell said, the legislature could have fixed the problem during the regular General Assembly session.

"The place that it should have been caught was in the Warner administration," Howell said.