Politics & Government

Many agencies don’t file required report, but few conceal finances

A seemingly alarming report this week from State Auditor Troy Kelley’s office says nearly a third of local governments don’t file an annual financial report as required by law.

What the report doesn’t mention is that in many cases, the agencies have opened up their books to state auditors in other contexts. Many received clean bills of financial health.

That’s the case for the two most prominent South Sound agencies listed as filing no annual reports at all the past three years. The most recent audits on the Thea Foss Waterway Development Authority and the Housing Authority of Thurston County are posted on the auditor’s website.

The problem, Kelley’s office explained, is that the agencies didn’t separately submit the financial information into a database. It’s called the Local Government Financial Reporting System, and agencies are required to file the reports there every year, often months before auditors do their separate checks.

“The Legislature and bond underwriters, among others, depend on the information filed in this system,” auditor’s spokesman Thomas Shapley said.

But several districts were surprised to find themselves on the list.

“This was just a simple miscommunication, so we will get that straightened out,” said Chris Lowell, executive director of the housing authority.

The auditor’s office named nearly 300 local governments it said didn’t report as required by law, either because reports were nonexistent, late or incomplete.

Among them was the city of Fife, where officials said they were only counted as late because they corrected their report.

Another city listed was Tumwater, which acknowledged it filed reports late and says its new finance director is working on finding efficiencies. But Tumwater disputed that its most recent report wasn’t filed at all, as the report contends.

The auditor’s office has e-mailed reminders to file to governments such as the waterway and housing agencies. Outreach has helped reduce the number of local governments that don’t file properly from more than 700 to more than 611 in the most recent year, according to the auditor’s “special report.”

But how many of those more than 600 governments truly are concealing their books?

The auditor’s office listed 36 agencies with unaudited spending. Those are the agencies that have provided the state nothing at all, Shapley said.

Over two recent years, they accounted for $2.2 million in unaudited spending, the auditor’s office said.

Those include water and parks districts, a town of about 35 people and the entities known as Thurston County Drainage District No. 3, Hopkins Drainage District No. 2 and Pierce County Drainage District No. 26.

The Pierce drainage district has no income and no spending, said Don Hayford, the district’s clerk. Its Sumner-area residents work on a volunteer basis to clean 13 manholes and a pipe between them, he said.

They would dissolve the district but don’t know how, he said.

“We don’t need it,” he said. “We do (the work) ourselves.”