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Daniels says state discovers extra $300 million

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Indiana's governor announced Tuesday that state officials have found $300 million that went untouched even as lawmakers made deep cuts to education and slashed vacant government jobs while it weathered the Great Recession.

Republican Gov. Mitch Daniels said the money was collected but never transferred to the state's general spending account, which lawmakers use to allocate funds to various programs and departments. While Daniels tried to downplay the discovery, Indiana Democrats called for investigations into how an administration sometimes held up by Republicans as a model for the rest of the U.S. could misplace so much money.

"This is a very serious error and the governor himself, he needs to launch an investigation into why this happened," said state Rep. Scott Pelath, a Democrat from Michigan City who is a member of the House Ways and Means Committee.

Daniels said the administration was looking into how the money went unaccounted for so long, but he also tried to minimize the amount that went untouched by comparing it to the state's entire yearly budget, which is about $14 billion.

But Senate Appropriations Committee Chairman Luke Kenley, a Republican from Noblesville, noted that adding just $120 million to the state coffers would be almost equivalent to opening two new racinos, which are horse racetracks with slot machines. Kenley said he hasn't had much time yet to ponder how such a large sum of money could go missing.

"I was so glad to see the money I guess I haven't worried about that part much," he said.

The issue arose in the state's e-filing tax system for companies. Money collected through that system wasn't moved to the general spending account. The problem started in the 2007 budget year and wasn't found until after the end of the 2011 fiscal year.

As more companies started using the e-filing system, the amount of money that went untouched increased. The amount missed in the first year was a relatively minute $4.7 million, but by the most recent budget the state had left untouched $140 million in corporate tax receipts — an amount equivalent to roughly 10 percent of expected collections.

An auditor in the Indiana Department of Revenue discovered the problem late last month while tracking a $25,000 tax check through the state's tax collection system.

Daniels said he had chalked up reduced tax collections to wild fluctuations in corporate profits during the recession.

In the last two years, lawmakers have cut education spending by $300 million. But the state also has been able to build a $1.2 billion nest egg — one of the reasons Republicans both in Indiana and nationally sometimes hold up the state as an example of fiscal responsibility and proper management.

"This wasn't just an accounting error. Children got hurt by this, families have suffered. And it all could have been avoided," Senate Minority Leader Vi Simpson, a Democrat from Bloomington, said in a statement.

Daniels didn't say whether he thought the money should be spent or banked, which would trigger automatic taxpayer refunds under a plan he pushed through the Legislature earlier this year.

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  • Bank Statement
    It doesn't seem to bother the governor that $300m was 'missing' and then 'discovered'? Sounds like blatant deficiency in their accountinig controls, yet he just shrugs his shoulders? How fiscally responsible is that?
  • Uncomprehensible
    Losing money in an accounting system is just not possible. Something smells of a deliberate, planned hiding of funds.
  • I was just missing $300 million last week
    Can someone please return it to me? I agree - more funds to the State Fair victims (probably cost less in the long run than litigation)
  • Embarrassing!
    What does Mitch's book say about doing bank reconciliations on a timely basis? First, the extravagant Lottery headquarters and now this. What else is there? This doesn't seem very fiscally responsible. Oh, since it is only 2% of the budget, not a big deal?? It is $300 millions! This is a very big deal. This is a major breakdown in internal accounting controls - most likely a symptom of a major problem.
  • Minor Suggestion
    So sorry to see all of the poor comments about Mitch. I like our governor. It's sad that he will not be our governor for long.
    It would be nice to see 10 million of this go to the victims of the State Fair.
    That's my two cents.
    And fire our treasurer - like today. I couldn't imagine not knowing where 2% of my company's budget is.
  • Put your gas mask on!
    If the head of Indiana DOR did not know this money was missing fire him. So did the state just throw the last 36 months worth of bank statements in the trash can?

    This is fraud and deceit or gross incompetence. Would this happen at a Publicly Traded Company?
  • Intentional Concealment
    yeah a new digital collection technique.... Let's dumb it down for us taxpayers.... It is called FRAUD, CONCEALMENT OR DECEIT!

    Not my man Mitch must be smoking weed again like he was at Princeton.

    I do not believe a word from Daniels or his former buddy Roob.

    I might understand if this was 5 or 10 million. What does the clown Eckert head of the DOR have to say.
  • Watch Out
    This money will go into a pet project so the true cost doesn't come out and daniels can save face.
  • Restore the Education Cuts or Pay Off Debt Early
    Great, now the Governor can either restore the education cuts made or pay off some of the state debt early.

    And spare us all the BS about giving everyone a $25 refund in some lame attempt to score political brownie points.

  • c'mon man
    I put a penny in my loafers the other day, and found it by mistake. Three hundred mill here, three hundred mill there, three hundred mill everywhere. No wonder our state lingers at the bottom of education, wages, the enviroment and every other measurement. Way to go, gov you and the boys are really watching my money, or I guess it is your money. How silly of me.
  • Crook
    Hmmmm. Isn't that $300 million the same amount taken from public schools at about the same time. Daniels is a pro at juggling the books so he can push through his agenda.

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