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Iowa State Auditor Rob Sand calls SF 478, passed by the Senate on Wednesday, “the greatest pro-corruption bill and the worst perversion of checks and balances in Iowa’s history.” It’s a bill Sand had been paying close attention to, since it targeted him. SF 478 imposes limits on the power of the auditor’s office to conduct audits.
If Gov. Kim Reynolds signs the bill into law, any state agency could refuse to provide auditors reviewing an agency’s use of taxpayer money with documents, and the auditor’s office would no longer be able to take the agency to court to require it to produce the public records on the use of public money.
Instead, the auditor would be required to take the records request to a three-member arbitration board. The auditor’s office would appoint one member, the agency refusing to provide documents would appoint another, and the governor’s office would appoint the third, who would have the deciding vote. Of course, all the state agencies Sand’s office may audit will be run either by someone appointed by Gov. Reynolds or by someone who is a political ally of the governor. (Sand is the only Democrat still holding a statewide elective office in Iowa, and Reynolds campaigned on behalf of all the statewide Republican officeholders.)
The governor has made no secret of her hostility to Sand’s work as auditor.
“I want my own AG, please,” Reynolds said at a 2022 campaign event. “And I need a state auditor that’s not trying to sue me every time they turn around.”
Sand has never sued Reynolds or the governor’s office. His audits have, however, produced information the governor may have found uncomfortable when it was made public. And a review of the governor’s use of federal pandemic relief funds in 2020 found Reynolds had misallocated millions of dollars for a project not related to COVID-19. Reynolds disputed Sand’s findings, but the U.S. Treasury Department confirmed the auditor’s conclusion and the governor was forced to return the $21 million in dispute.
Sen. Michael Bousselot, a Republican from Ankeny and the floor manager for SF 478, said the legislature needed to act as the “watchdog of the auditor.”
“When government goes too far, we are the watchdogs,” Bousselot said during the floor debate. He reassured his colleagues that he believes “the mission of the audit, protecting taxpayer dollars, is paramount.”
“But we also protect Iowans.”
Bousselot pointed to a provision of a bill that would prohibit auditors from receiving personal information such as an individual’s medical records or school/college grades. State law already requires the auditor’s office to keep that sort of information confidential.
Bousselot also pointed to two Iowa Supreme Court decisions in cases brought by Sand. Bousselot suggested both cases demonstrated a menacing overreach by the auditor’s office. But in the first case, an unanimous Iowa Supreme Court found that Sand had acted within his authority in the audit of the University of Iowa’s deal to lease its utilities plant.
In the other case, all of the justices concurred that Sand could not subpoena records from the Iowa Communities Assurance Pool, which allows local governments to pool their insurance risks, because it does not qualify as a “governmental subdivision” under Iowa Code. Sand had begun an audit after the Associated Press reported in 2019 that the pool’s board members had “frequently held public meetings at posh out-of-state resorts, costing tens of thousands of dollars while making it harder for the public to attend.”
“I listened to your opening comments Sen. Bousselot and, quite honestly, this is governance by gaslighting Iowans,” Sen. Janet Petersen, a Des Moines Democrat, said during Wednesday’s debate. “We have an auditor in our state because we need checks and balances in government and we need a taxpayer watchdog and Iowans know that. So for you to try to turn the tune to try to say this is about privacy for Iowans is really outrageous.”
An analysis by the nonpartisan Legislative Services Agency (LSA) of the original version of SF 478, passed by the Senate last month, found it would put at risk $12 billion in funding the state has received from the federal government, because it would restrict federally mandated oversight of how that money is spent. The Iowa House amended the bill before passing it on a party-line vote.
“I think that the Senate file that came over here was at risk,” Rep. Mike Bergan, a Republican from Dorchester, said before the House vote last week. “I believe that the amendment that has been adopted solves those issues.”
“The fact that we can lose federal funding depending on if we are denied access to records has everything to do with whether or not they can keep denying us records,” the auditor said after the House vote. “They can still do that under this House bill, and the claim that this has solved that problem is absolutely false.”
The LSA has not issued an updated analysis of the amended bill.
The country’s three largest auditor associations — the National State Auditors Association, the Institute of Internal Auditors, and the Association of Local Government Auditors— — have all issued statements opposing SF 478. All those organizations are nonpartisan.
John Geragosian, president of the National State Auditors Association, said in a statement that the system of arbitration created by the bill “clearly favors the audited agency rather than having an objective third party decide the matter.”
SF 478 passed the Senate on a party-line vote, 33-16. It now goes to Gov. Reynolds for her signature.
Another bill passed by the Senate on Wednesday highlighted the need for an independent state office that can fully review how tax dollars are spent.
The governor’s request for her office’s budget received a floor vote on Wednesday. Even though the budget request is for the same number of employees as the current year, Reynolds requested a $500,000 increase for her office.
During the floor debate. Sen. Petersen asked Sen. Tim Kraayenbrink, a Republican from Fort Dodge and chair of the Appropriations Committee, the governor needed half a million more dollars if her office is not adding any full-time staffers.
“I don’t know,” Kraayenbrink replied, after saying he had asked the governor’s office that question.
The budget for the governor’s office was approved on a party-line vote.