Mitch Daniels loses track of half a billion dollars in 4 months

In just 4 months, the state of Indiana has discovered $526 million in taxpayer funds that had been mishandled by the Daniels administration.

On Thursday, news broke that Indiana had discovered more than $206 million dollars that should have been distributed to counties. Local and county income taxes are collected by the state, and are supposed to be passed back to the counties.

The director of the state’s Office of Management & Budget, Adam Horst, reportedly learned of this mistake several weeks ago, and informed Mitch Daniels of the problem shortly before Daniels left for an unofficial visit to Israel. Indiana Revenue Commissioner John Eckart will resign – but not until after tax season – and two other high-level staffers for the Department of Revenue retired or resigned.

“We are taking this very seriously,” Horst told reporters this morning.

Just a few months ago, in December, Mitch Daniels jubilantly revealed that the state had “found” more than $320 million dollars in money that had never been transferred to the state’s general fund.

After that $320 million was found, Democrats in the state House and Senate called for an independent audit, but a party-line vote in a Senate committee rejected that idea. The Republican chairman of the State Budget Commitee, Jeff Espich, went so far as saying that looking into previous warnings about the state’s tax collection policies was “a red herring.” Indianapolis’ WRTV reported that, “Espich also said it did not appear the $320 million mistake was a criminal act, and thus did not see the point of performing an investigation.

It only took another missing $206 million for the voices of reason to prevail. As the Indianapolis Star’s Mary Beth Schneider reported on Thursday:

The biggest admission that a change in personnel isn’t enough is the state’s decision to hire an outside firm to conduct an independent audit.

Democrats had called for that very step in December, after the first error was found, but Daniels, Horst and Republican fiscal leaders in the legislature had firmly opposed that. Horst said that the internal reviews after the first error worked, as they found this new error.

Mitch Daniels’ recalcitrant stance on double-checking his math is not without precedent. A couple years back, I noted that Mitch rejected calls to verify Anthem’s request to drastically increase health care costs in Indiana, even after other states found basic mathematical errors in Anthem’s applications.

A little history, just for perspective:

Indiana Governor Mitch Daniels was the first budget director under President George W. Bush. When Bush & Daniels took office in January 2001, the Congressional Budget Office projected a ten-year surplus of $5.6 trillion. In August 2003, the Center on Budget and Policy Priorities re-ran the numbers for that same ten-year period, plugging in the policies enacted under Mitch and W. The result was a $4.4 trillion dollar deficit. That means that over the course of Daniels’ 29 months as head of the Office of Management & Budget, the nation’s financial situation deteriorated by $10 trillion dollars.