$137 Million Mistake Was Covered Up, GOP Alleges

RICHMOND, Aug. 28 -- Senior Republicans in Virginia's House of Delegates on Monday accused officials in the current and past Democratic administrations of intentionally covering up accounting errors that led to a $137 million mistake in the state budget.

Former secretary of finance John M. Bennett has said he was aware of a $30 million math error in December but did not tell then-Gov. Mark R. Warner or his successor, Timothy M. Kaine. Other tax and budget officials also knew about that error and another that surfaced later, according to a legislative inquiry.

Those revelations prompted howls of outrage by the GOP lawmakers, who used the rare public admission of a mistake to hammer their political adversaries. One demanded that Bennett, now a finance officer at a state university, be subpoenaed to testify at a Washington-style hearing.

"I want him to do this under oath," Fairfax Del. Timothy D. Hugo (R) said on the House floor. "If you were in the private sector and did this, these people would be facing serious consequences."

House Majority Leader H. Morgan Griffith (R-Salem) said GOP leaders will demand greater clarity about budget numbers in the future. And he urged Kaine to explain what actions he is taking against members of his staff.

"What will be the consequences for those responsible for this error and, more importantly, for the intentional lengthy coverup of the error?" Griffith asked.

Kaine told reporters that the failure of some in his tax and budget staff to inform their superiors of the budget errors was a "serious mistake." He said he has warned his staff that future decisions to withhold information from him would be dealt with seriously.

"If I ever find that information like that is known that's not brought to my attention, there's going to be changes in management," Kaine said. He also said his office had hired consultants to offer suggestions on making sure the mistakes aren't repeated.

Bennett's successor, Jody M. Wagner, fielded questions for more than an hour from members of the House Appropriations Committee, who grilled her about how months could go by without the errors being discovered and fixed.

Committee Chairman Vincent F. Callahan Jr. (R-Fairfax) asked whether she agreed that Bennett's decision not to inform her of the errors was an "appalling lack of fiduciary responsibility."

Wagner responded, "I don't think I would use those words, but I certainly feel it would be helpful if he had told me."

State officials said the budget mistakes began when a math error was discovered in December as the Warner administration was preparing to hand over control to Kaine's staff. Bennett said he and a handful of Warner's senior tax and budget officials -- several of whom continued to serve in Kaine's administration -- concluded that the math error would be fixed during the budget process that began in January.

At the time, Bennett also directed the tax department to review its spreadsheets to determine whether other potential inconsistencies existed, Bennett said in an interview last week.

Richard Brown, director of the state's planning and budget office under Warner and Kaine, said that review apparently did not catch the second error, in which a formula used to allocate the state's sales tax revenue to public schools was misapplied.

"If I had to do it all over again," Brown said, he would "follow up aggressively" to determine what the tax department review had found.

Budget officials said that because of the errors, schools were told to expect more money for the 2007 budget year than they should have. But the extra money was not allocated in the state budget. Instead of taking money back from schools, however, Kaine officials have proposed giving schools the funds they expected.

The Senate passed Kaine's proposal Monday, but House Republicans blocked efforts to fix the problem, saying they needed more time to study the governor's plan.