Daniels legacy on line with Ind.’s $205M tax error

Apr 5, 2012, 10:34 PM

Associated Press

INDIANAPOLIS (AP) – Gov. Mitch Daniels has built a national image as a persnickety fiscal manager with an eye for detail, but two massive accounting errors that have tilted Indiana’s books by more than half-a-billion dollars threaten to tarnish that reputation as the popular Republican prepares to leave office.

State officials announced Thursday that a programming error at the Indiana Department of Revenue led the state to mistakenly withhold $205 million that should have gone to county governments. It was similar to a programming mistake disclosed in December, when budget analysts discovered $320 million the state didn’t know it had.

Revenue department commissioner John Eckart weathered the first gaffe but not the second, and tendered his resignation this week, effective at the end of the current tax season, state budget director Adam Horst said at a Thursday news conference in which the most recent oversight was disclosed. Two of Eckart’s deputies also left the department.

The state is now searching for an outside auditor to review how the state misplaced $525 million, Horst said. He said he also is looking at new budget controls that would help the state identify problems before they fester for years at a time.

“We feel like it’s all you can do at this point, and you hope that over time that confidence is warranted,” Horst said when asked how he would win back the public’s trust.

Republican leaders in Indiana’s General Assembly requested a say in picking the auditor. Democrats, who called for an independent audit of the state’s budgeting operation after the first mistake was discovered, responded “we told you so” to Thursday’s news.

Daniels may have the most on the line as he winds toward the end of his eight-year run as governor and continues touring the nation as one of the Republicans lead budget experts.

Since Daniels announced last year he would not run for president, he still is mentioned in Republican circles as a possible pick for vice president, although he has adamantly stated the same family concerns that kept him out of the presidential race would keep him from joining a ticket. Daniels left on a private trip to Israel on Tuesday, the same day he found out about the tax problem. He would not be available to take any questions, spokeswoman Jane Jankowski said Thursday.

“We discovered a problem, took responsibility, acted immediately and fixed the problem,” Jankowski said Thursday. “The state is projecting a $1.85 billion surplus, largely because of additional cost savings by agencies and stronger than expected revenues. Indiana’s fiscal position is stronger than ever.”

The governor’s critics say he has skated on the national stage, while bungling management of the state. Beyond the two tax errors, they point to the state’s legal battles with IBM over the privatization of welfare delivery and problems at the Department of Child Services.

“That’s one bad legacy,” House Democratic Minority Leader Patrick Bauer said Thursday. “I don’t know how he’s able to overcome that.”

Darrell West, vice president and director of Governance Studies at The Brookings Institution, said the latest gaffe could hurt Daniels’ image.

“Mitch Daniels has a reputation for running a tight ship so continuing problems in the administration of state government harm that image. It is hard to understand how millions of dollars weren’t distributed properly,” West said. “The governor has to deal effectively with these issues and make sure they don’t keep happening. Otherwise, people will reassess how they judge his stewardship.”

Horst did not give an exact date for when Eckart would leave his post. The two other top revenue officials, Chief Information Officer Roy D. Gabriel and Chief Financial Officer Darrel Anderson, left after the error was discovered, Department of Revenue spokesman Bob Dittmer said. Eckart was not available for questions Thursday, Dittmer said.

The revenue department says the mishandled money will be distributed with interest to the 91 of Indiana’s 92 counties that have local income taxes.

___

Tom LoBianco can be reached at
http://www.twitter.com/tomlobianco

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

The image from video released on Jan. 27, 2023, by the City of Memphis, shows Tyre Nichols on the g...
Associated Press

Memphis authorities release video in Tyre Nichols’ death

Video showing Memphis officers beating a Black man was made public Friday after they were charged with murder in the death of Tyre Nichols.
22 hours ago
Demonstrators stage a rally in front of the White House to celebrate President Joe Biden's plan to ...
Kevin Stone

Lawsuits keeping over 300,000 Arizonans from getting student loan relief

Lawsuits are preventing more than 300,000 Arizonans from having some or all of their student debt dismissed, the Biden administration said Friday.
22 hours ago
FILE -  A Goodyear tire sits on display at a tire shop on Feb. 12, 2014, in South Euclid, Ohio. A f...
Associated Press

Arizona lawyer subpoenaed in criminal investigation of Goodyear tires

A federal grand jury in Los Angeles is gathering evidence in a criminal investigation of Goodyear recreational vehicle tires.
2 days ago
Following days of rain, floodwaters cover streets in the Planada community of Merced County, Calif....
Associated Press

Atmospheric rivers in California boost water allocation for cities

Public water agencies in California will be getting more water from the state because of recent heavy rain.
2 days ago
(Brian Munoz/St. Louis Post-Dispatch via AP, File)...
Associated Press

FDA declines to regulate CBD; calls on Congress for fix

The Food and Drug Administration said Thursday there are too many unknowns about CBD products to regulate them as foods or supplements under the agency’s current structure and called on Congress to create new rules for the massive and growing market. The marijuana-derived products have become increasingly popular in lotions, tinctures and foods, while their […]
2 days ago
FILE - An employee works in the battery assembly hall at the BMW Spartanburg plant in Greer, S.C., ...
Associated Press

US economy slowed but still grew at 2.9% rate last quarter

WASHINGTON (AP) — The U.S. economy expanded at a 2.9% annual pace from October through December, ending 2022 with momentum despite the pressure of high interest rates and widespread fears of a looming recession. Thursday’s estimate from the Commerce Department showed that the nation’s gross domestic product — the broadest gauge of economic output — […]
2 days ago

Sponsored Articles

...
Day & Night Air Conditioning, Heating and Plumbing

Company looking for oldest air conditioner and wants to reward homeowner with new one

Does your air conditioner make weird noises or a burning smell when it starts? If so, you may be due for an AC unit replacement.
(Desert Institute for Spine Care photo)...
DESERT INSTITUTE FOR SPINE CARE

Why DISC is world renowned for back and neck pain treatments

Fifty percent of Americans and 90% of people at least 50 years old have some level of degenerative disc disease.
...
Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
Daniels legacy on line with Ind.’s $205M tax error