Inslee: No pay for indicted Auditor Troy Kelley during leave

Gov. Jay Inslee has directed state departments to withhold pay from indicted State Auditor Troy Kelley during the leave of absence Kelley plans to take starting next week.

In a letter delivered Monday to Kelley and made public Tuesday, the governor reiterated his call for Kelley to resign and informed Kelley he would not receive pay while taking temporary leave from his job as the state’s top fiscal watchdog.

As far as his pay goes, Kelley isn’t putting up a fight. The Tacoma Democrat issued a written statement Tuesday saying he wouldn’t attempt to collect his salary and benefits when he takes leave starting Monday.

In a statement relayed by his personal spokesman, Kelley also said he would delegate many of his duties to Jan Jutte, the Auditor’s Office’s director of operations, while he is out of the office.

“During my leave of absence, I will not represent the Washington State Auditor’s Office in any capacity until I can put my legal matters to rest, at which time I intend to resume my duties,” Kelley’s emailed statement said.

The first-term auditor was indicted this month in federal court on charges of tax evasion, possession of stolen property and lying under oath. He pleaded not guilty to 10 felony counts and said he would fight to clear his name.

In Monday’s letter, Inslee called it “extremely troubling” that Kelley had not told Inslee’s office or the public how the Auditor’s Office would continue to run while Kelley is away. The Auditor’s Office is charged with identifying fraud and waste in government.

Using power granted to him by the state constitution, the governor demanded that Kelley respond in writing by Wednesday (April 29) with a “specific plan” for how the Auditor’s Office would operate during Kelley’s planned leave.

In addition to explaining who would take over Kelley’s duties, Inslee told Kelley the plan must explain how long Kelley plans to remain on leave, and under what circumstances Kelley would plan to return.

Kelley said in his statement Tuesday that he has “spent the last few days working with my team on a plan to ensure a smooth transition of duties, which I’ve communicated to Governor Inslee.” He didn’t specify how long he intends to be out of the office, nor did he say whether he had responded to Inslee in writing as requested.

Jutte, who will be assuming most of Kelley’s responsibilities while he is on leave, said in a statement that she takes those duties “very seriously.”

“Our office has the statutory authority to audit all governments in the state,” Jutte said.

“This vital work continues, and will continue, uninterrupted,” she said.

Shortly after Kelley’s indictment was made public, the Auditor’s Office sought advice from the state Attorney General’s Office about what rules should govern Kelley’s planned leave, including whether or not Kelley should receive pay. David Postman, a spokesman for Inslee’s office, said the governor’s decision to withhold pay from Kelley during his leave was based partly on that legal advice, which has not been made public.

The Auditor’s Office said it couldn’t release a copy of the attorney general’s guidance unless Kelley waived attorney-client privilege. A spokesman for Kelley, Mark Firmani, said Kelley had not agreed to allow the document’s release as of Tuesday.

Kelley, 50, served three terms in the state House before winning election to state auditor in 2012.

The federal charges against Kelley relate to his past business that tracked documents related to real-estate sales.

Authorities say from 2006 to 2008, Kelley’s business failed to refund two title companies and their customers $2.97 million they were owed. They also allege Kelley avoided about $1 million in income taxes in those years by underreporting his income.

The most serious of the charges against Kelley could result in a prison sentence of up to 20 years.

Should Kelley be convicted of a felony, he would automatically be removed from office. Officials from both parties have urged him to resign, and some lawmakers have discussed whether they should try to force him out.

On Tuesday, two Republican lawmakers introduced House Bill 2249, which would allow the governor to replace statewide elected officials if they take leave but refuse to resign.

The proposal from Republican Reps. Drew MacEwen of Union and Drew Stokesbary of Auburn would declare a position vacant if the officeholder takes a temporary leave of absence for reasons other than illness or military duties.

“A leave of absence to fight federal charges in unacceptable,” MacEwen said in a news release.

Kelley said his decision to take leave should give the public confidence that the Auditor’s Office is being well-managed while he focuses on his legal defense.

“I believe it is important for everyone to remember that under our system, everyone is presumed innocent until proven guilty beyond a reasonable doubt, in front of a jury of one’s peers,” Kelley said in his statement. “I also believe it is important to note that none of the allegations leveled against me call into question my work as an elected official.”

This story was originally published April 28, 2015 at 9:42 AM with the headline "Inslee: No pay for indicted Auditor Troy Kelley during leave."