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California

Troy Senik
Parks and Obfuscation
A cash-strapped California agency “misplaces” tens of millions of taxpayer dollars.
29 August 2012

For years, the threat of budget cuts to California’s state parks has served as an effective cudgel to raise taxes and fees or to increase the state’s ever-burgeoning debt obligations. Every time the state’s budget shows signs of strain (a chronic condition of late), the possibility of reduced hours or closures among the 278 state park sites generates media stories on the horrors of the budget axe. It’s a canny political strategy known as “Washington Monument Syndrome” (after the National Park Service’s habit of claiming that budget cuts will lead to immediate closure of America’s favorite obelisk). The none-too-subtle message: You want cuts? You’ll get cuts—good and hard.

Coming out of the most recent budget cycle, the parks faced some of the biggest reductions in memory. Following a budget that cut funding by $22 million, officials developed plans to close more than a quarter of state parks on July 1. The remaining three-quarters would see substantially shorter hours and fewer services. What began as a public-finance doomsday scenario, however, ended up cultivating the green shoots of civil society. Rather than accepting state government as their only source of sustenance, dozens of parks formed partnerships with nonprofits, private-sector supporters, or local governments to keep their doors open. The parks also launched a massive fundraising campaign, with participants ranging from wealthy park aficionados to schoolchildren hosting bake sales. By the time the closures would have otherwise been imminent, state officials announced that only one location would go dark. A great story, right? There was just one problem: at the same time park officials were publicly pleading hardship, the Department of Parks and Recreation was sitting on a secret stash of money equal to more than double the amount it had lost to budget cuts.

In July, the Sacramento Bee unearthed devastating revelations that the state parks department had hidden more than $54 million in two “special funds”—the term for revenue sources that flow from user fees rather than taxes—taken from park revenues and fees the state applies to off-road vehicles. The fallout was swift. After the Bee’s story appeared, parks department director Ruth Coleman quickly tendered her resignation, though she denied direct knowledge of the funds (a claim that has subsequently been called into question). Two more aides—one of Coleman’s assistants and the department’s chief counsel—resigned shortly after. The official held directly responsible for misplacing the funds—Deputy Director of Administrative Services Manuel Thomas Lopez—had already resigned in May after a demotion late last year.

For his part, Governor Jerry Brown attempted to make light of the situation, saying at a press conference, “Hallelujah! More money is better than less money.” That’s an understandable response from a man one downturn away from having to rifle through couch cushions to balance the state budget, but it’s far too glib a characterization of what happened. While Brown may have preferred to think of the hidden funds as a windfall for government, the reality is that state employees had already been helping themselves to the secret stash. Indeed, the Bee only uncovered the scandal as part of an earlier investigation that found money being used illegally to finance buyouts of vacation days for department employees. The buyouts totaled well over a quarter of a million dollars, including nearly $29,000 for Lopez himself, who was struggling with an underwater mortgage and subsequently filed for bankruptcy. Contra Brown, that’s less money for California, not more.

It’s less money as well for the Californians who donated cash or labor to keep state parks open; they’re none too happy about the deception. And it’s less money for taxpayers, as the Bee demonstrated in a follow-up story highlighting the parks department’s practice of gratuitously exhausting its annual budget (even to the extent of setting up dummy accounts for purchases not made) to avoid a reduction in spending for the following year.

At its core, the Parks and Recreation scandal shows that California’s government has grown large enough to have effectively broken its leash. The missing money went unnoticed for more than a decade in part because institutional oversight has become so lax as to be nonexistent. When it came to “special funds” like the ones in question here, the California Department of Finance —the cabinet-level agency that prepares the numbers used to formulate the state budget—relied on an honor system, in which the funds’ beneficiaries self-reported the balances. The state controller’s office, by contrast, did conduct independent audits, but no one ever bothered to check the resulting discrepancies.

Face with such acute dysfunction, Governor Brown would be wrong to treat this scandal as the public-sector equivalent of finding a stray $20 bill in a coat pocket. In just over two months, California voters will head to the polls to render judgment on Proposition 30, the governor’s ballot initiative to hike the state’s sales and income taxes to national highs. For all of its unapologetic liberalism, the Golden State retains a populist aversion to taxes, the reason that the last seven efforts to boost rates have failed at the ballot box. That hostility is only enflamed by a sense that the state’s real problems lie on the spending side. The tax measure is hard enough to sell in the shadow of excessive expenditures, such as the state’s seemingly deathless high-speed rail boondoggle; but it’s indefensible when tens of millions of dollars at a time are disappearing into bureaucratic black holes.

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