Summary

Initiative 900 requires that the state auditor conduct independent, comprehensive performance audits of state government and each of its agencies, accounts, and programs; also local governments; state and local education governmental entities; state and local transportation entities; and other governmental entities. Beginning on December 8, 2005, 0.16 percent of the state’s sales and use tax revenues shall be dedicated to funding comprehensive performance audits. The revenue is to be deposited in a dedicated account.

The initiative requires that the scope for each performance audit shall include nine specific
elements: (1) identification of cost savings; (2) identification of services that can be reduced or eliminated; (3) identification of programs or services that can be transferred to the private sector; (4) analysis of gaps or overlaps in programs or services and recommendations to correct gaps or overlaps; (5) feasibility of pooling information technology systems within the department; (6) analysis of the roles and functions of the department, and recommendations to change or eliminate departmental roles or functions; (7) recommendations for statutory or regulatory changes that may be necessary for the department to properly carry out its functions; (8) analysis of departmental performance data, performance measures, and self-assessment systems; and (9) identification of best practices.

Additional Background

The 2005 Legislature passed a performance audit bill, ESHB 1064, and appropriated $2.8
million for the biennium, enabling the state auditor to conduct performance audits of state
government. This legislation augments existing performance audit entities, such as the Joint Legislative Audit and Review Committee and the Transportation Performance Audit Board and directs that audits be coordinated and not duplicated by these and other existing audit entities. The legislation creates a ten-member citizen advisory committee which is required to develop a work plan and criteria for performance audits and to seek public input on these prior to adoption.The legislation identifies thirteen elements that may, but are not required to be, included in each audit, and these are similar to those specified in I-900.

ARGUMENTS FOR THE MEASURE

I-900 proponents did not appear before the committee but on their website they make the
following arguments in support of the measure:

• Voters don't know whether politicians are spending our tax revenues as cost-effectively as possible. Politicians have repeatedly blocked our state auditor from conducting performance audits.

• Washington is the only state in the nation that prohibits the independently elected state auditor from doing the job he or she was hired to do without explicit legislative permission.

• This lack of full audit authority is costing the taxpayers billions of dollars in potential savings.

• This act dedicates a portion of the state's existing sales and use tax to fund comprehensive performance audits. This would provide a guaranteed $10 million for the audits in the first year, and increasing amounts in future years as revenues grow.

• Legislators and newspapers think that because the 2005 Legislature passed a performance audit bill, this initiative has lost steam. But I-900 proponents argue their proposal is better. I-900 would give voters a distinct choice between a relatively weak performance audit measure approved by the Legislature and the stronger measure.

• I-900 allows the state auditor alone to determine which agencies and programs are audited and it guarantees a funding source. The Legislature's ESHB 1064 limits the audits to state government and gives an unelected citizen committee a say on who is audited. It assures only $2.8 million in the next two years and no guaranteed funding thereafter.

• The state auditor would be put in the position of pleading every year for funding "from the very people he is going to audit”.

• The politically appointed, unelected oversight board would take away some of the independence of the elected state auditor to carry out the audits.

• Brian Sonntag, the current elected auditor, is quoted as having said that he agrees with criticisms of ESHB 1064. He has stated that the legislation isn't adequately funded, that it doesn't apply to local government, and that it does not give the state auditor sole authority over performance audits.

• Having one official responsible for the program increases accountability. The state auditor is an elected official who can be voted out of office if performance audits are mishandled.

ARGUMENTS AGAINST THE MEASURE

I-900 opponents cited the following arguments against the measure:

• I-900 is not a people’s initiative, rather it is a measure that has been funded to the tune of 75% by a single individual. Signatures were gathered by paid workers.

• The initiative is not needed. The Legislature already acted on the issue in the last session.

• The initiative was drafted for one person with no public input. By contrast, the legislative measure, ESHB 1064, went through a public process with input from those who would be audited as well as those wanting to hold government accountable.

• I-900 does not take into account the redundancy it creates, as it makes no effort to avoid duplication of work by the Joint Legislative Audit and Review Committee (JLARC) and the Transportation Performance Audit Board (TPAB). These entities already conduct performance audits.

• The initiative gives the state auditor a dangerous amount of power as there is no check or balance on his authority to audit an entity. There is no guarantee that elected auditors will behave professionally. Future auditors could misuse the broad powers and dedicated funding source granted by the initiative.

• The state auditor has estimated that if I-900 passes, his office would grow four-fold in size.

• Proponents claim there will be huge savings as a result of governmental performance audits. There is no evidence that such audits create significant savings.

• In fact, audits could generate recommendations for improvement that require expensive new governmental actions.

• Evaluating the performance of governmental entities is rightfully a legislative role. Only the legislative body can determine whether its policies are being implemented as intended.

• The nine elements prescribed by I-900 as required in each audit are too rigid and may require the auditor to expend audit resources on meaningless inquiries.

• An effective audit policy will tailor audit questions to each agency and situation at hand.

• Since many state and local programs are actually implemented by nonprofit agencies under contract with governmental units, implementing I-900 will have incalculable effects probably mostly disruptive – on the nonprofits’ ability to perform their services.

• I-900 makes no mention of the costs that will be incurred by the organizations being audited.  These costs might well exceed any possible savings that the audit process identifies.

Position and RATIONALE

The Municipal League opposes Initiative 900.

Performance audits can be valuable as a management and accountability tool to enhance
governmental efficiency. They should be used judiciously by independent, non-political auditors to effect improvements in individual agencies and programs. The performance audit legislation ESHB 1064 already passed by the Legislature in 2005 provides such a mechanism and funds it appropriately. It provides for citizen input and oversight, selective audits based on criteria and a work plan, and conformance to governmental audit standards.

Initiative 900, in contrast, uses performance audits to wage a political debate by other means. It throws an excessive amount of money at an overly broad set of audit mandates. It is far from clear that the benefit of blanket state and local government audits will exceed the very high cost of conducting and responding to many audits each year. The questions that the initiative requires the auditors to answer in each performance audit are far from neutral and assume that waste and misfeasance must be present in each audited agency. It grants the state auditor a dedicated funding source and broad auditing powers over all of state and local government without any checks or balances such as citizen oversight or legislative review and appropriation, thus creating opportunity for political mischief.

For these reasons, the Municipal League opposes I-900.